Correlation Between ALEFARM BREWING and Selective Insurance
Can any of the company-specific risk be diversified away by investing in both ALEFARM BREWING and Selective 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 ALEFARM BREWING and Selective Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALEFARM BREWING DK 05 and Selective Insurance Group, you can compare the effects of market volatilities on ALEFARM BREWING and Selective 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 ALEFARM BREWING with a short position of Selective Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALEFARM BREWING and Selective Insurance.
Diversification Opportunities for ALEFARM BREWING and Selective Insurance
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ALEFARM and Selective is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding ALEFARM BREWING DK 05 and Selective Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selective Insurance and ALEFARM BREWING 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 ALEFARM BREWING DK 05 are associated (or correlated) with Selective Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selective Insurance has no effect on the direction of ALEFARM BREWING i.e., ALEFARM BREWING and Selective Insurance go up and down completely randomly.
Pair Corralation between ALEFARM BREWING and Selective Insurance
Assuming the 90 days horizon ALEFARM BREWING DK 05 is expected to generate 2.48 times more return on investment than Selective Insurance. However, ALEFARM BREWING is 2.48 times more volatile than Selective Insurance Group. It trades about 0.0 of its potential returns per unit of risk. Selective Insurance Group is currently generating about -0.01 per unit of risk. If you would invest 30.00 in ALEFARM BREWING DK 05 on November 5, 2024 and sell it today you would lose (12.00) from holding ALEFARM BREWING DK 05 or give up 40.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
ALEFARM BREWING DK 05 vs. Selective Insurance Group
Performance |
| Timeline |
| ALEFARM BREWING DK |
| Selective Insurance |
ALEFARM BREWING and Selective Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALEFARM BREWING and Selective Insurance
The main advantage of trading using opposite ALEFARM BREWING and Selective Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALEFARM BREWING position performs unexpectedly, Selective 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 Selective Insurance will offset losses from the drop in Selective Insurance's long position.| ALEFARM BREWING vs. Cairo Communication SpA | ALEFARM BREWING vs. CARDINAL HEALTH | ALEFARM BREWING vs. Telecom Argentina SA | ALEFARM BREWING vs. RCI Hospitality Holdings |
| Selective Insurance vs. Air Lease | Selective Insurance vs. Global Ship Lease | Selective Insurance vs. WILLIS LEASE FIN | Selective Insurance vs. GigaMedia |
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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