Correlation Between Voltronic Power and Central Reinsurance
Can any of the company-specific risk be diversified away by investing in both Voltronic Power 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 Voltronic Power and Central Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Voltronic Power Technology and Central Reinsurance Corp, you can compare the effects of market volatilities on Voltronic Power 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 Voltronic Power with a short position of Central Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voltronic Power and Central Reinsurance.
Diversification Opportunities for Voltronic Power and Central Reinsurance
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Voltronic and Central is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Voltronic Power Technology 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 Voltronic Power 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 Voltronic Power Technology 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 Voltronic Power i.e., Voltronic Power and Central Reinsurance go up and down completely randomly.
Pair Corralation between Voltronic Power and Central Reinsurance
Assuming the 90 days trading horizon Voltronic Power Technology is expected to under-perform the Central Reinsurance. In addition to that, Voltronic Power is 3.38 times more volatile than Central Reinsurance Corp. It trades about -0.07 of its total potential returns per unit of risk. Central Reinsurance Corp is currently generating about -0.1 per unit of volatility. If you would invest 2,700 in Central Reinsurance Corp on October 25, 2024 and sell it today you would lose (140.00) from holding Central Reinsurance Corp or give up 5.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Voltronic Power Technology vs. Central Reinsurance Corp
Performance |
| Timeline |
| Voltronic Power Tech |
| Central Reinsurance Corp |
Voltronic Power and Central Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voltronic Power and Central Reinsurance
The main advantage of trading using opposite Voltronic Power and Central Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voltronic Power 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.| Voltronic Power vs. Silergy Corp | Voltronic Power vs. Airtac International Group | Voltronic Power vs. Advantech Co | Voltronic Power vs. Sinbon Electronics Co |
| Central Reinsurance vs. Taiwan Semiconductor Manufacturing | Central Reinsurance vs. Evergreen Marine Corp | Central Reinsurance vs. Yang Ming Marine | Central Reinsurance vs. Wan Hai Lines |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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