Correlation Between Crown Asia and National Reinsurance
Can any of the company-specific risk be diversified away by investing in both Crown Asia 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 Crown Asia and National Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crown Asia Chemicals and National Reinsurance, you can compare the effects of market volatilities on Crown Asia 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 Crown Asia with a short position of National Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Asia and National Reinsurance.
Diversification Opportunities for Crown Asia and National Reinsurance
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Crown and National is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Crown Asia Chemicals and National Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Reinsurance and Crown Asia 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 Crown Asia Chemicals 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 Crown Asia i.e., Crown Asia and National Reinsurance go up and down completely randomly.
Pair Corralation between Crown Asia and National Reinsurance
Assuming the 90 days trading horizon Crown Asia is expected to generate 4.17 times less return on investment than National Reinsurance. But when comparing it to its historical volatility, Crown Asia Chemicals is 3.61 times less risky than National Reinsurance. It trades about 0.04 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 Together |
| Strength | Significant |
| Accuracy | 60.34% |
| Values | Daily Returns |
Crown Asia Chemicals vs. National Reinsurance
Performance |
| Timeline |
| Crown Asia Chemicals |
| National Reinsurance |
Crown Asia and National Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crown Asia and National Reinsurance
The main advantage of trading using opposite Crown Asia and National Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown Asia 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.| Crown Asia vs. Metropolitan Bank Trust | Crown Asia vs. National Reinsurance | Crown Asia vs. Union Bank of | Crown Asia vs. Jollibee Foods Corp |
| 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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