Correlation Between Grand Ocean and First Insurance
Can any of the company-specific risk be diversified away by investing in both Grand Ocean 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 Grand Ocean and First Insurance 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 First Insurance Co, you can compare the effects of market volatilities on Grand Ocean 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 Grand Ocean with a short position of First Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Ocean and First Insurance.
Diversification Opportunities for Grand Ocean and First Insurance
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Grand and First is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Grand Ocean Retail and First Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Insurance 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 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 Grand Ocean i.e., Grand Ocean and First Insurance go up and down completely randomly.
Pair Corralation between Grand Ocean and First Insurance
Assuming the 90 days trading horizon Grand Ocean Retail is expected to under-perform the First Insurance. In addition to that, Grand Ocean is 1.8 times more volatile than First Insurance Co. It trades about -0.03 of its total potential returns per unit of risk. First Insurance Co is currently generating about 0.08 per unit of volatility. If you would invest 1,725 in First Insurance Co on November 28, 2024 and sell it today you would earn a total of 1,045 from holding First Insurance Co or generate 60.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grand Ocean Retail vs. First Insurance Co
Performance |
| Timeline |
| Grand Ocean Retail |
| First Insurance |
Grand Ocean and First Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand Ocean and First Insurance
The main advantage of trading using opposite Grand Ocean and First Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Ocean 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.| Grand Ocean vs. First Steamship Co | Grand Ocean vs. Far Eastern Department | Grand Ocean vs. LongDa Construction Development | Grand Ocean vs. Collins Co |
| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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