Correlation Between Townsquare Media and China Reinsurance
Can any of the company-specific risk be diversified away by investing in both Townsquare Media and China Reinsurance 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 Townsquare Media and China Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Townsquare Media and China Reinsurance, you can compare the effects of market volatilities on Townsquare Media and China Reinsurance 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 Townsquare Media with a short position of China Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Townsquare Media and China Reinsurance.
Diversification Opportunities for Townsquare Media and China Reinsurance
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Townsquare and China is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Townsquare Media and China Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Reinsurance and Townsquare Media 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 Townsquare Media are associated (or correlated) with China Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Reinsurance has no effect on the direction of Townsquare Media i.e., Townsquare Media and China Reinsurance go up and down completely randomly.
Pair Corralation between Townsquare Media and China Reinsurance
Assuming the 90 days horizon Townsquare Media is expected to under-perform the China Reinsurance. But the stock apears to be less risky and, when comparing its historical volatility, Townsquare Media is 2.08 times less risky than China Reinsurance. The stock trades about -0.05 of its potential returns per unit of risk. The China Reinsurance is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 9.30 in China Reinsurance on October 30, 2024 and sell it today you would earn a total of 0.45 from holding China Reinsurance or generate 4.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Townsquare Media vs. China Reinsurance
Performance |
| Timeline |
| Townsquare Media |
| China Reinsurance |
Townsquare Media and China Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Townsquare Media and China Reinsurance
The main advantage of trading using opposite Townsquare Media and China Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Townsquare Media position performs unexpectedly, China Reinsurance 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 China Reinsurance will offset losses from the drop in China Reinsurance's long position.| Townsquare Media vs. CVS Health | Townsquare Media vs. Plastic Omnium | Townsquare Media vs. Molina Healthcare | Townsquare Media vs. Martin Marietta Materials |
| China Reinsurance vs. Swiss Re AG | China Reinsurance vs. Reinsurance Group of | China Reinsurance vs. Superior Plus Corp | China Reinsurance vs. Origin Agritech |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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