Correlation Between Song Ho and First Insurance
Can any of the company-specific risk be diversified away by investing in both Song Ho 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 Song Ho and First Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Song Ho Industrial and First Insurance Co, you can compare the effects of market volatilities on Song Ho 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 Song Ho with a short position of First Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Song Ho and First Insurance.
Diversification Opportunities for Song Ho and First Insurance
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Song and First is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Song Ho Industrial and First Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Insurance and Song Ho 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 Song Ho Industrial 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 Song Ho i.e., Song Ho and First Insurance go up and down completely randomly.
Pair Corralation between Song Ho and First Insurance
Assuming the 90 days trading horizon Song Ho is expected to generate 3.82 times less return on investment than First Insurance. But when comparing it to its historical volatility, Song Ho Industrial is 2.43 times less risky than First Insurance. It trades about 0.12 of its potential returns per unit of risk. First Insurance Co is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,525 in First Insurance Co on November 30, 2024 and sell it today you would earn a total of 195.00 from holding First Insurance Co or generate 7.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Song Ho Industrial vs. First Insurance Co
Performance |
| Timeline |
| Song Ho Industrial |
| First Insurance |
Song Ho and First Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Song Ho and First Insurance
The main advantage of trading using opposite Song Ho and First Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Song Ho 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.| Song Ho vs. LandMark Optoelectronics | Song Ho vs. Elan Microelectronics Corp | Song Ho vs. Orient Semiconductor Electronics | Song Ho vs. WIN Semiconductors |
| First Insurance vs. EnTie Commercial Bank | First Insurance vs. Union Bank of | First Insurance vs. Bank of Kaohsiung | First Insurance vs. Taiwan Business Bank |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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