Correlation Between House Of and National Reinsurance

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Can any of the company-specific risk be diversified away by investing in both House Of 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 House Of and National Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between House of Investments and National Reinsurance, you can compare the effects of market volatilities on House Of 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 House Of with a short position of National Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of House Of and National Reinsurance.

Diversification Opportunities for House Of and National Reinsurance

0.11
  Correlation Coefficient

Average diversification

The 3 months correlation between House and National is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding House of Investments and National Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Reinsurance and House Of 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 House of Investments 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 House Of i.e., House Of and National Reinsurance go up and down completely randomly.

Pair Corralation between House Of and National Reinsurance

Assuming the 90 days trading horizon House of Investments is expected to generate 0.99 times more return on investment than National Reinsurance. However, House of Investments is 1.01 times less risky than National Reinsurance. It trades about 0.05 of its potential returns per unit of risk. National Reinsurance is currently generating about -0.21 per unit of risk. If you would invest  342.00  in House of Investments on November 5, 2024 and sell it today you would earn a total of  6.00  from holding House of Investments or generate 1.75% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy70.0%
ValuesDaily Returns

House of Investments  vs.  National Reinsurance

 Performance 
       Timeline  
House of Investments 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in House of Investments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, House Of is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
National Reinsurance 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days National Reinsurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

House Of and National Reinsurance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with House Of and National Reinsurance

The main advantage of trading using opposite House Of and National Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if House Of 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.
The idea behind House of Investments and National Reinsurance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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