Correlation Between Grand Ocean and Central Reinsurance
Can any of the company-specific risk be diversified away by investing in both Grand Ocean 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 Grand Ocean and Central Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grand Ocean Retail and Central Reinsurance Corp, you can compare the effects of market volatilities on Grand Ocean 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 Grand Ocean with a short position of Central Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Ocean and Central Reinsurance.
Diversification Opportunities for Grand Ocean and Central Reinsurance
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Grand and Central is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Grand Ocean Retail 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 Grand Ocean 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 Grand Ocean Retail 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 Grand Ocean i.e., Grand Ocean and Central Reinsurance go up and down completely randomly.
Pair Corralation between Grand Ocean and Central Reinsurance
Assuming the 90 days trading horizon Grand Ocean Retail is expected to under-perform the Central Reinsurance. In addition to that, Grand Ocean is 3.76 times more volatile than Central Reinsurance Corp. It trades about -0.14 of its total potential returns per unit of risk. Central Reinsurance Corp is currently generating about -0.21 per unit of volatility. If you would invest 2,700 in Central Reinsurance Corp on August 26, 2024 and sell it today you would lose (120.00) from holding Central Reinsurance Corp or give up 4.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grand Ocean Retail vs. Central Reinsurance Corp
Performance |
| Timeline |
| Grand Ocean Retail |
| Central Reinsurance Corp |
Grand Ocean and Central Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand Ocean and Central Reinsurance
The main advantage of trading using opposite Grand Ocean and Central Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Ocean 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.| Grand Ocean vs. First Steamship Co | Grand Ocean vs. Far Eastern Department | Grand Ocean vs. LongDa Construction Development | Grand Ocean vs. Collins Co |
| Central Reinsurance vs. Insyde Software | Central Reinsurance vs. Meiloon Industrial Co | Central Reinsurance vs. Grand Ocean Retail | Central Reinsurance vs. Mercuries Life Insurance |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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