Correlation Between China Communications and Reinsurance Group
Can any of the company-specific risk be diversified away by investing in both China Communications and Reinsurance Group 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 Communications and Reinsurance Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Communications Services and Reinsurance Group of, you can compare the effects of market volatilities on China Communications and Reinsurance Group 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 Communications with a short position of Reinsurance Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Communications and Reinsurance Group.
Diversification Opportunities for China Communications and Reinsurance Group
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between China and Reinsurance is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding China Communications Services and Reinsurance Group of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reinsurance Group and China Communications 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 Communications Services are associated (or correlated) with Reinsurance Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reinsurance Group has no effect on the direction of China Communications i.e., China Communications and Reinsurance Group go up and down completely randomly.
Pair Corralation between China Communications and Reinsurance Group
Assuming the 90 days horizon China Communications Services is expected to generate 3.71 times more return on investment than Reinsurance Group. However, China Communications is 3.71 times more volatile than Reinsurance Group of. It trades about 0.08 of its potential returns per unit of risk. Reinsurance Group of is currently generating about 0.07 per unit of risk. If you would invest 8.17 in China Communications Services on August 29, 2024 and sell it today you would earn a total of 39.83 from holding China Communications Services or generate 487.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Communications Services vs. Reinsurance Group of
Performance |
| Timeline |
| China Communications |
| Reinsurance Group |
China Communications and Reinsurance Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Communications and Reinsurance Group
The main advantage of trading using opposite China Communications and Reinsurance Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Communications position performs unexpectedly, Reinsurance Group 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 Reinsurance Group will offset losses from the drop in Reinsurance Group's long position.| China Communications vs. T Mobile | China Communications vs. ATT Inc | China Communications vs. Deutsche Telekom AG |
| Reinsurance Group vs. Superior Plus Corp | Reinsurance Group vs. NMI Holdings | Reinsurance Group vs. Origin Agritech | Reinsurance Group vs. SIVERS SEMICONDUCTORS AB |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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