Correlation Between First Insurance and Rafael Microelectronics
Can any of the company-specific risk be diversified away by investing in both First Insurance and Rafael Microelectronics at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining First Insurance and Rafael Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Insurance Co and Rafael Microelectronics, you can compare the effects of market volatilities on First Insurance and Rafael Microelectronics and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in First Insurance with a short position of Rafael Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Insurance and Rafael Microelectronics.
Diversification Opportunities for First Insurance and Rafael Microelectronics
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Rafael is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding First Insurance Co and Rafael Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rafael Microelectronics and First Insurance is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on First Insurance Co are associated (or correlated) with Rafael Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rafael Microelectronics has no effect on the direction of First Insurance i.e., First Insurance and Rafael Microelectronics go up and down completely randomly.
Pair Corralation between First Insurance and Rafael Microelectronics
Assuming the 90 days trading horizon First Insurance is expected to generate 1.55 times less return on investment than Rafael Microelectronics. But when comparing it to its historical volatility, First Insurance Co is 2.72 times less risky than Rafael Microelectronics. It trades about 0.18 of its potential returns per unit of risk. Rafael Microelectronics is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 13,350 in Rafael Microelectronics on October 25, 2024 and sell it today you would earn a total of 2,050 from holding Rafael Microelectronics or generate 15.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Insurance Co vs. Rafael Microelectronics
Performance |
| Timeline |
| First Insurance |
| Rafael Microelectronics |
First Insurance and Rafael Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Insurance and Rafael Microelectronics
The main advantage of trading using opposite First Insurance and Rafael Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Insurance position performs unexpectedly, Rafael Microelectronics can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Rafael Microelectronics will offset losses from the drop in Rafael Microelectronics' long position.| First Insurance vs. EnTie Commercial Bank | First Insurance vs. Union Bank of | First Insurance vs. Bank of Kaohsiung | First Insurance vs. Taiwan Business Bank |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the CEOs Directory module to screen CEOs from public companies around the world.
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