Correlation Between Joinsoon Electronics and First Insurance
Can any of the company-specific risk be diversified away by investing in both Joinsoon Electronics and First Insurance 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 Joinsoon Electronics and First Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Joinsoon Electronics MFG and First Insurance Co, you can compare the effects of market volatilities on Joinsoon Electronics and First Insurance 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 Joinsoon Electronics with a short position of First Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Joinsoon Electronics and First Insurance.
Diversification Opportunities for Joinsoon Electronics and First Insurance
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Joinsoon and First is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Joinsoon Electronics MFG and First Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Insurance and Joinsoon Electronics 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 Joinsoon Electronics MFG are associated (or correlated) with First Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Insurance has no effect on the direction of Joinsoon Electronics i.e., Joinsoon Electronics and First Insurance go up and down completely randomly.
Pair Corralation between Joinsoon Electronics and First Insurance
Assuming the 90 days trading horizon Joinsoon Electronics MFG is expected to under-perform the First Insurance. In addition to that, Joinsoon Electronics is 2.55 times more volatile than First Insurance Co. It trades about -0.1 of its total potential returns per unit of risk. First Insurance Co is currently generating about 0.39 per unit of volatility. If you would invest 2,275 in First Insurance Co on September 1, 2024 and sell it today you would earn a total of 210.00 from holding First Insurance Co or generate 9.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Joinsoon Electronics MFG vs. First Insurance Co
Performance |
| Timeline |
| Joinsoon Electronics MFG |
| First Insurance |
Joinsoon Electronics and First Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Joinsoon Electronics and First Insurance
The main advantage of trading using opposite Joinsoon Electronics and First Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Joinsoon Electronics position performs unexpectedly, First Insurance 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 First Insurance will offset losses from the drop in First Insurance's long position.The idea behind Joinsoon Electronics MFG and First Insurance Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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