Correlation Between Wonderful and First Insurance
Can any of the company-specific risk be diversified away by investing in both Wonderful 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 Wonderful and First Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wonderful Hi Tech Co and First Insurance Co, you can compare the effects of market volatilities on Wonderful 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 Wonderful with a short position of First Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wonderful and First Insurance.
Diversification Opportunities for Wonderful and First Insurance
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Wonderful and First is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Wonderful Hi Tech Co and First Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Insurance and Wonderful 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 Wonderful Hi Tech Co 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 Wonderful i.e., Wonderful and First Insurance go up and down completely randomly.
Pair Corralation between Wonderful and First Insurance
Assuming the 90 days trading horizon Wonderful Hi Tech Co is expected to under-perform the First Insurance. In addition to that, Wonderful is 1.7 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 0.29 per unit of volatility. If you would invest 2,430 in First Insurance Co on September 13, 2024 and sell it today you would earn a total of 125.00 from holding First Insurance Co or generate 5.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wonderful Hi Tech Co vs. First Insurance Co
Performance |
| Timeline |
| Wonderful Hi Tech |
| First Insurance |
Wonderful and First Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wonderful and First Insurance
The main advantage of trading using opposite Wonderful and First Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wonderful 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.| Wonderful vs. Gemtek Technology Co | Wonderful vs. Ruentex Development Co | Wonderful vs. WiseChip Semiconductor | Wonderful vs. Novatek Microelectronics Corp |
| First Insurance vs. Central Reinsurance Corp | First Insurance vs. Huaku Development Co | First Insurance vs. Fubon Financial Holding | First Insurance vs. Chailease Holding Co |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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