Correlation Between Guangdong Investment and Selective Insurance
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and Selective 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 Guangdong Investment and Selective Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guangdong Investment Limited and Selective Insurance Group, you can compare the effects of market volatilities on Guangdong Investment and Selective 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 Guangdong Investment with a short position of Selective Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and Selective Insurance.
Diversification Opportunities for Guangdong Investment and Selective Insurance
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Guangdong and Selective is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and Selective Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selective Insurance and Guangdong Investment 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 Guangdong Investment Limited are associated (or correlated) with Selective Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selective Insurance has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and Selective Insurance go up and down completely randomly.
Pair Corralation between Guangdong Investment and Selective Insurance
Assuming the 90 days horizon Guangdong Investment Limited is expected to generate 4.89 times more return on investment than Selective Insurance. However, Guangdong Investment is 4.89 times more volatile than Selective Insurance Group. It trades about 0.15 of its potential returns per unit of risk. Selective Insurance Group is currently generating about -0.19 per unit of risk. If you would invest 61.00 in Guangdong Investment Limited on October 28, 2024 and sell it today you would earn a total of 19.00 from holding Guangdong Investment Limited or generate 31.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Investment Limited vs. Selective Insurance Group
Performance |
| Timeline |
| Guangdong Investment |
| Selective Insurance |
Guangdong Investment and Selective Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and Selective Insurance
The main advantage of trading using opposite Guangdong Investment and Selective Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment position performs unexpectedly, Selective 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 Selective Insurance will offset losses from the drop in Selective Insurance's long position.| Guangdong Investment vs. Essential Utilities | Guangdong Investment vs. Guangdong Investment | Guangdong Investment vs. Anhui Conch Cement | Guangdong Investment vs. Beijing Enterprises Water |
| Selective Insurance vs. Kemper | Selective Insurance vs. Donegal Group B | Selective Insurance vs. Argo Group International | Selective Insurance vs. Global Indemnity PLC |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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