Correlation Between Apex Mining and National Reinsurance
Can any of the company-specific risk be diversified away by investing in both Apex Mining and National 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 Apex Mining and National Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apex Mining Co and National Reinsurance, you can compare the effects of market volatilities on Apex Mining and National 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 Apex Mining with a short position of National Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apex Mining and National Reinsurance.
Diversification Opportunities for Apex Mining and National Reinsurance
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apex and National is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Apex Mining Co and National Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Reinsurance and Apex Mining 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 Apex Mining Co are associated (or correlated) with National Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Reinsurance has no effect on the direction of Apex Mining i.e., Apex Mining and National Reinsurance go up and down completely randomly.
Pair Corralation between Apex Mining and National Reinsurance
Assuming the 90 days trading horizon Apex Mining is expected to generate 3.86 times less return on investment than National Reinsurance. But when comparing it to its historical volatility, Apex Mining Co is 3.35 times less risky than National Reinsurance. It trades about 0.06 of its potential returns per unit of risk. National Reinsurance is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 40.00 in National Reinsurance on September 15, 2024 and sell it today you would earn a total of 30.00 from holding National Reinsurance or generate 75.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 73.38% |
| Values | Daily Returns |
Apex Mining Co vs. National Reinsurance
Performance |
| Timeline |
| Apex Mining |
| National Reinsurance |
Apex Mining and National Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apex Mining and National Reinsurance
The main advantage of trading using opposite Apex Mining and National Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apex Mining position performs unexpectedly, National 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 National Reinsurance will offset losses from the drop in National Reinsurance's long position.| Apex Mining vs. Nickel Asia Corp | Apex Mining vs. Atok Big Wedge | Apex Mining vs. Philex Mining Corp | Apex Mining vs. Atlas Consolidated Mining |
| National Reinsurance vs. Atlas Consolidated Mining | National Reinsurance vs. Philex Mining Corp | National Reinsurance vs. East West Banking | National Reinsurance vs. Apex Mining 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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