Correlation Between First Insurance and Green World
Can any of the company-specific risk be diversified away by investing in both First Insurance and Green World 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 Green World 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 Green World Fintech, you can compare the effects of market volatilities on First Insurance and Green World 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 Green World. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Insurance and Green World.
Diversification Opportunities for First Insurance and Green World
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Green is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding First Insurance Co and Green World Fintech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green World Fintech 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 Green World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green World Fintech has no effect on the direction of First Insurance i.e., First Insurance and Green World go up and down completely randomly.
Pair Corralation between First Insurance and Green World
Assuming the 90 days trading horizon First Insurance is expected to generate 2.77 times less return on investment than Green World. But when comparing it to its historical volatility, First Insurance Co is 2.51 times less risky than Green World. It trades about 0.08 of its potential returns per unit of risk. Green World Fintech is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,083 in Green World Fintech on September 12, 2024 and sell it today you would earn a total of 4,787 from holding Green World Fintech or generate 229.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
First Insurance Co vs. Green World Fintech
Performance |
| Timeline |
| First Insurance |
| Green World Fintech |
First Insurance and Green World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Insurance and Green World
The main advantage of trading using opposite First Insurance and Green World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Insurance position performs unexpectedly, Green World 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 Green World will offset losses from the drop in Green World's long position.| First Insurance vs. Central Reinsurance Corp | First Insurance vs. Huaku Development Co | First Insurance vs. Fubon Financial Holding | First Insurance vs. Chailease Holding Co |
| Green World vs. Level Biotechnology | Green World vs. Golden Biotechnology | Green World vs. Apex Biotechnology Corp | Green World vs. Arbor Technology |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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