Correlation Between Far EasTone and Central Reinsurance
Can any of the company-specific risk be diversified away by investing in both Far EasTone 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 Far EasTone and Central Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Far EasTone Telecommunications and Central Reinsurance Corp, you can compare the effects of market volatilities on Far EasTone 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 Far EasTone with a short position of Central Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Far EasTone and Central Reinsurance.
Diversification Opportunities for Far EasTone and Central Reinsurance
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Far and Central is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Far EasTone Telecommunications 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 Far EasTone 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 Far EasTone Telecommunications 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 Far EasTone i.e., Far EasTone and Central Reinsurance go up and down completely randomly.
Pair Corralation between Far EasTone and Central Reinsurance
Assuming the 90 days trading horizon Far EasTone Telecommunications is expected to generate 1.18 times more return on investment than Central Reinsurance. However, Far EasTone is 1.18 times more volatile than Central Reinsurance Corp. It trades about 0.07 of its potential returns per unit of risk. Central Reinsurance Corp is currently generating about 0.06 per unit of risk. If you would invest 8,860 in Far EasTone Telecommunications on September 13, 2024 and sell it today you would earn a total of 140.00 from holding Far EasTone Telecommunications or generate 1.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Far EasTone Telecommunications vs. Central Reinsurance Corp
Performance |
| Timeline |
| Far EasTone Telecomm |
| Central Reinsurance Corp |
Far EasTone and Central Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Far EasTone and Central Reinsurance
The main advantage of trading using opposite Far EasTone and Central Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Far EasTone 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.| Far EasTone vs. Cheng Mei Materials | Far EasTone vs. Lemtech Holdings Co | Far EasTone vs. Chia Chang Co | Far EasTone vs. Ruentex Development Co |
| Central Reinsurance vs. Huaku Development Co | Central Reinsurance vs. Fubon Financial Holding | 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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