Correlation Between CHINA FORTUNE and REVO INSURANCE
Can any of the company-specific risk be diversified away by investing in both CHINA FORTUNE and REVO 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 CHINA FORTUNE and REVO INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA FORTUNE HLDGHD001 and REVO INSURANCE SPA, you can compare the effects of market volatilities on CHINA FORTUNE and REVO 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 CHINA FORTUNE with a short position of REVO INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA FORTUNE and REVO INSURANCE.
Diversification Opportunities for CHINA FORTUNE and REVO INSURANCE
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CHINA and REVO is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding CHINA FORTUNE HLDGHD001 and REVO INSURANCE SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REVO INSURANCE SPA and CHINA FORTUNE 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 FORTUNE HLDGHD001 are associated (or correlated) with REVO INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REVO INSURANCE SPA has no effect on the direction of CHINA FORTUNE i.e., CHINA FORTUNE and REVO INSURANCE go up and down completely randomly.
Pair Corralation between CHINA FORTUNE and REVO INSURANCE
Assuming the 90 days trading horizon CHINA FORTUNE HLDGHD001 is expected to generate 79.23 times more return on investment than REVO INSURANCE. However, CHINA FORTUNE is 79.23 times more volatile than REVO INSURANCE SPA. It trades about 0.1 of its potential returns per unit of risk. REVO INSURANCE SPA is currently generating about 0.08 per unit of risk. If you would invest 1.30 in CHINA FORTUNE HLDGHD001 on September 12, 2024 and sell it today you would lose (0.45) from holding CHINA FORTUNE HLDGHD001 or give up 34.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA FORTUNE HLDGHD001 vs. REVO INSURANCE SPA
Performance |
| Timeline |
| CHINA FORTUNE HLDGHD001 |
| REVO INSURANCE SPA |
CHINA FORTUNE and REVO INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA FORTUNE and REVO INSURANCE
The main advantage of trading using opposite CHINA FORTUNE and REVO INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA FORTUNE position performs unexpectedly, REVO 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 REVO INSURANCE will offset losses from the drop in REVO INSURANCE's long position.| CHINA FORTUNE vs. REVO INSURANCE SPA | CHINA FORTUNE vs. United Insurance Holdings | CHINA FORTUNE vs. Canon Marketing Japan | CHINA FORTUNE vs. SIEM OFFSHORE NEW |
| REVO INSURANCE vs. Lyxor 1 | REVO INSURANCE vs. Xtrackers LevDAX | REVO INSURANCE vs. Xtrackers ShortDAX | REVO INSURANCE vs. Superior Plus 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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