Correlation Between Shanghai Commercial and Central Reinsurance
Can any of the company-specific risk be diversified away by investing in both Shanghai Commercial 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 Shanghai Commercial and Central Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shanghai Commercial Savings and Central Reinsurance Corp, you can compare the effects of market volatilities on Shanghai Commercial 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 Shanghai Commercial with a short position of Central Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Commercial and Central Reinsurance.
Diversification Opportunities for Shanghai Commercial and Central Reinsurance
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shanghai and Central is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Commercial Savings 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 Shanghai Commercial 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 Shanghai Commercial Savings 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 Shanghai Commercial i.e., Shanghai Commercial and Central Reinsurance go up and down completely randomly.
Pair Corralation between Shanghai Commercial and Central Reinsurance
Assuming the 90 days trading horizon Shanghai Commercial Savings is expected to under-perform the Central Reinsurance. But the stock apears to be less risky and, when comparing its historical volatility, Shanghai Commercial Savings is 1.15 times less risky than Central Reinsurance. The stock trades about -0.03 of its potential returns per unit of risk. The Central Reinsurance Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shanghai Commercial Savings vs. Central Reinsurance Corp
Performance |
| Timeline |
| Shanghai Commercial |
| Central Reinsurance Corp |
Shanghai Commercial and Central Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Commercial and Central Reinsurance
The main advantage of trading using opposite Shanghai Commercial and Central Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Commercial 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.| Shanghai Commercial vs. Central Reinsurance Corp | Shanghai Commercial vs. Huaku Development Co | Shanghai Commercial vs. Chailease Holding Co | Shanghai Commercial vs. CTBC Financial Holding |
| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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