Correlation Between Asia United and National Reinsurance
Can any of the company-specific risk be diversified away by investing in both Asia United 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 Asia United and National Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia United Bank and National Reinsurance, you can compare the effects of market volatilities on Asia United 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 Asia United with a short position of National Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia United and National Reinsurance.
Diversification Opportunities for Asia United and National Reinsurance
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Asia and National is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Asia United Bank and National Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Reinsurance and Asia United 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 Asia United Bank 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 Asia United i.e., Asia United and National Reinsurance go up and down completely randomly.
Pair Corralation between Asia United and National Reinsurance
Assuming the 90 days trading horizon Asia United is expected to generate 1.44 times less return on investment than National Reinsurance. But when comparing it to its historical volatility, Asia United Bank is 4.42 times less risky than National Reinsurance. It trades about 0.13 of its potential returns per unit of risk. National Reinsurance is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 56.00 in National Reinsurance on September 14, 2024 and sell it today you would earn a total of 12.00 from holding National Reinsurance or generate 21.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 63.27% |
| Values | Daily Returns |
Asia United Bank vs. National Reinsurance
Performance |
| Timeline |
| Asia United Bank |
| National Reinsurance |
Asia United and National Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia United and National Reinsurance
The main advantage of trading using opposite Asia United and National Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia United 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.| Asia United vs. BDO Unibank | Asia United vs. Security Bank Corp | Asia United vs. Union Bank of | Asia United vs. Philippine National Bank |
| National Reinsurance vs. GT Capital Holdings | National Reinsurance vs. Allhome Corp | National Reinsurance vs. Jollibee Foods Corp | National Reinsurance vs. LFM Properties Corp |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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