Correlation Between Golden Biotechnology and Central Reinsurance
Can any of the company-specific risk be diversified away by investing in both Golden Biotechnology and Central 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 Golden Biotechnology and Central Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Biotechnology and Central Reinsurance Corp, you can compare the effects of market volatilities on Golden Biotechnology and Central 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 Golden Biotechnology with a short position of Central Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Biotechnology and Central Reinsurance.
Diversification Opportunities for Golden Biotechnology and Central Reinsurance
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Golden and Central is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Golden Biotechnology and Central Reinsurance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Reinsurance Corp and Golden Biotechnology 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 Golden Biotechnology are associated (or correlated) with Central Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Reinsurance Corp has no effect on the direction of Golden Biotechnology i.e., Golden Biotechnology and Central Reinsurance go up and down completely randomly.
Pair Corralation between Golden Biotechnology and Central Reinsurance
Assuming the 90 days trading horizon Golden Biotechnology is expected to under-perform the Central Reinsurance. In addition to that, Golden Biotechnology is 2.32 times more volatile than Central Reinsurance Corp. It trades about -0.08 of its total potential returns per unit of risk. Central Reinsurance Corp is currently generating about 0.06 per unit of volatility. If you would invest 1,870 in Central Reinsurance Corp on September 3, 2024 and sell it today you would earn a total of 710.00 from holding Central Reinsurance Corp or generate 37.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Golden Biotechnology vs. Central Reinsurance Corp
Performance |
| Timeline |
| Golden Biotechnology |
| Central Reinsurance Corp |
Golden Biotechnology and Central Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Biotechnology and Central Reinsurance
The main advantage of trading using opposite Golden Biotechnology and Central Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Biotechnology position performs unexpectedly, Central 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 Central Reinsurance will offset losses from the drop in Central Reinsurance's long position.| Golden Biotechnology vs. Grape King Bio | Golden Biotechnology vs. YungShin Global Holding | Golden Biotechnology vs. Standard Chemical Pharmaceutical |
| Central Reinsurance vs. Huaku Development Co | Central Reinsurance vs. Chailease Holding Co | Central Reinsurance vs. CTBC Financial Holding |
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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