Correlation Between Yulon Finance and Central Reinsurance
Can any of the company-specific risk be diversified away by investing in both Yulon Finance 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 Yulon Finance and Central Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yulon Finance Corp and Central Reinsurance Corp, you can compare the effects of market volatilities on Yulon Finance 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 Yulon Finance with a short position of Central Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon Finance and Central Reinsurance.
Diversification Opportunities for Yulon Finance and Central Reinsurance
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Yulon and Central is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Finance Corp 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 Yulon Finance 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 Yulon Finance Corp 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 Yulon Finance i.e., Yulon Finance and Central Reinsurance go up and down completely randomly.
Pair Corralation between Yulon Finance and Central Reinsurance
Assuming the 90 days trading horizon Yulon Finance Corp is expected to under-perform the Central Reinsurance. In addition to that, Yulon Finance is 2.41 times more volatile than Central Reinsurance Corp. It trades about -0.32 of its total potential returns per unit of risk. Central Reinsurance Corp is currently generating about -0.19 per unit of volatility. If you would invest 2,695 in Central Reinsurance Corp on September 3, 2024 and sell it today you would lose (115.00) from holding Central Reinsurance Corp or give up 4.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yulon Finance Corp vs. Central Reinsurance Corp
Performance |
| Timeline |
| Yulon Finance Corp |
| Central Reinsurance Corp |
Yulon Finance and Central Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yulon Finance and Central Reinsurance
The main advantage of trading using opposite Yulon Finance and Central Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon Finance 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.| Yulon Finance vs. Chailease Holding Co | Yulon Finance vs. Taiwan Secom Co | Yulon Finance vs. TTET Union Corp | Yulon Finance vs. China Steel Chemical |
| Central Reinsurance vs. Huaku Development Co | Central Reinsurance vs. Chailease Holding Co | Central Reinsurance vs. CTBC Financial Holding |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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