Correlation Between China Reinsurance and VIRG NATL
Can any of the company-specific risk be diversified away by investing in both China Reinsurance and VIRG NATL 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 China Reinsurance and VIRG NATL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Reinsurance and VIRG NATL BANKSH, you can compare the effects of market volatilities on China Reinsurance and VIRG NATL 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 China Reinsurance with a short position of VIRG NATL. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Reinsurance and VIRG NATL.
Diversification Opportunities for China Reinsurance and VIRG NATL
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and VIRG is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding China Reinsurance and VIRG NATL BANKSH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIRG NATL BANKSH and China Reinsurance 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 China Reinsurance are associated (or correlated) with VIRG NATL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIRG NATL BANKSH has no effect on the direction of China Reinsurance i.e., China Reinsurance and VIRG NATL go up and down completely randomly.
Pair Corralation between China Reinsurance and VIRG NATL
Assuming the 90 days horizon China Reinsurance is expected to generate 1.96 times more return on investment than VIRG NATL. However, China Reinsurance is 1.96 times more volatile than VIRG NATL BANKSH. It trades about 0.07 of its potential returns per unit of risk. VIRG NATL BANKSH is currently generating about -0.34 per unit of risk. If you would invest 9.65 in China Reinsurance on October 16, 2024 and sell it today you would earn a total of 0.35 from holding China Reinsurance or generate 3.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Reinsurance vs. VIRG NATL BANKSH
Performance |
| Timeline |
| China Reinsurance |
| VIRG NATL BANKSH |
China Reinsurance and VIRG NATL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Reinsurance and VIRG NATL
The main advantage of trading using opposite China Reinsurance and VIRG NATL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Reinsurance position performs unexpectedly, VIRG NATL 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 VIRG NATL will offset losses from the drop in VIRG NATL's long position.| China Reinsurance vs. MUENCHRUECKUNSADR 110 | China Reinsurance vs. Reinsurance Group of | China Reinsurance vs. Superior Plus Corp | China Reinsurance vs. NMI Holdings |
| VIRG NATL vs. INSURANCE AUST GRP | VIRG NATL vs. LANDSEA GREEN MANAGEMENT | VIRG NATL vs. Cleanaway Waste Management | VIRG NATL vs. China Reinsurance |
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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