Correlation Between Converge Information and National Reinsurance
Can any of the company-specific risk be diversified away by investing in both Converge Information 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 Converge Information and National Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Converge Information Communications and National Reinsurance, you can compare the effects of market volatilities on Converge Information 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 Converge Information with a short position of National Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Converge Information and National Reinsurance.
Diversification Opportunities for Converge Information and National Reinsurance
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Converge and National is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Converge Information Communica and National Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Reinsurance and Converge Information 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 Converge Information Communications 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 Converge Information i.e., Converge Information and National Reinsurance go up and down completely randomly.
Pair Corralation between Converge Information and National Reinsurance
Assuming the 90 days trading horizon Converge Information is expected to generate 13.94 times less return on investment than National Reinsurance. But when comparing it to its historical volatility, Converge Information Communications is 1.5 times less risky than National Reinsurance. It trades about 0.03 of its potential returns per unit of risk. National Reinsurance is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 63.00 in National Reinsurance on December 6, 2024 and sell it today you would earn a total of 15.00 from holding National Reinsurance or generate 23.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Converge Information Communica vs. National Reinsurance
Performance |
| Timeline |
| Converge Information |
| National Reinsurance |
Converge Information and National Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Converge Information and National Reinsurance
The main advantage of trading using opposite Converge Information and National Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Converge Information 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.| Converge Information vs. SM Investments Corp | Converge Information vs. East West Banking | Converge Information vs. Top Frontier Investment | Converge Information vs. Metro Retail Stores |
| National Reinsurance vs. Century Pacific Food | National Reinsurance vs. Crown Asia Chemicals | National Reinsurance vs. Integrated Micro Electronics | National Reinsurance vs. Swift Foods |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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