Correlation Between Southern Rubber and Military Insurance
Can any of the company-specific risk be diversified away by investing in both Southern Rubber and Military Insurance 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 Southern Rubber and Military Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Rubber Industry and Military Insurance Corp, you can compare the effects of market volatilities on Southern Rubber and Military Insurance 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 Southern Rubber with a short position of Military Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Rubber and Military Insurance.
Diversification Opportunities for Southern Rubber and Military Insurance
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Southern and Military is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Southern Rubber Industry and Military Insurance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Military Insurance Corp and Southern Rubber 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 Southern Rubber Industry are associated (or correlated) with Military Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Military Insurance Corp has no effect on the direction of Southern Rubber i.e., Southern Rubber and Military Insurance go up and down completely randomly.
Pair Corralation between Southern Rubber and Military Insurance
Assuming the 90 days trading horizon Southern Rubber Industry is expected to generate 1.11 times more return on investment than Military Insurance. However, Southern Rubber is 1.11 times more volatile than Military Insurance Corp. It trades about 0.18 of its potential returns per unit of risk. Military Insurance Corp is currently generating about 0.03 per unit of risk. If you would invest 1,255,000 in Southern Rubber Industry on September 13, 2024 and sell it today you would earn a total of 140,000 from holding Southern Rubber Industry or generate 11.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Rubber Industry vs. Military Insurance Corp
Performance |
| Timeline |
| Southern Rubber Industry |
| Military Insurance Corp |
Southern Rubber and Military Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Rubber and Military Insurance
The main advantage of trading using opposite Southern Rubber and Military Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Rubber position performs unexpectedly, Military Insurance 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 Military Insurance will offset losses from the drop in Military Insurance's long position.| Southern Rubber vs. FIT INVEST JSC | Southern Rubber vs. Damsan JSC | Southern Rubber vs. An Phat Plastic | Southern Rubber vs. Alphanam ME |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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