Correlation Between GMO Internet and Singapore Reinsurance
Can any of the company-specific risk be diversified away by investing in both GMO Internet and Singapore 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 GMO Internet and Singapore Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMO Internet and Singapore Reinsurance, you can compare the effects of market volatilities on GMO Internet and Singapore 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 GMO Internet with a short position of Singapore Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMO Internet and Singapore Reinsurance.
Diversification Opportunities for GMO Internet and Singapore Reinsurance
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between GMO and Singapore is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding GMO Internet and Singapore Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Reinsurance and GMO Internet 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 GMO Internet are associated (or correlated) with Singapore Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Reinsurance has no effect on the direction of GMO Internet i.e., GMO Internet and Singapore Reinsurance go up and down completely randomly.
Pair Corralation between GMO Internet and Singapore Reinsurance
Assuming the 90 days horizon GMO Internet is expected to generate 1.73 times less return on investment than Singapore Reinsurance. But when comparing it to its historical volatility, GMO Internet is 1.66 times less risky than Singapore Reinsurance. It trades about 0.16 of its potential returns per unit of risk. Singapore Reinsurance is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 3,500 in Singapore Reinsurance on November 8, 2024 and sell it today you would earn a total of 300.00 from holding Singapore Reinsurance or generate 8.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GMO Internet vs. Singapore Reinsurance
Performance |
| Timeline |
| GMO Internet |
| Singapore Reinsurance |
GMO Internet and Singapore Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMO Internet and Singapore Reinsurance
The main advantage of trading using opposite GMO Internet and Singapore Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMO Internet position performs unexpectedly, Singapore 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 Singapore Reinsurance will offset losses from the drop in Singapore Reinsurance's long position.| GMO Internet vs. Scientific Games | GMO Internet vs. GREENX METALS LTD | GMO Internet vs. International Game Technology | GMO Internet vs. East Africa Metals |
| Singapore Reinsurance vs. Tyson Foods | Singapore Reinsurance vs. MTY Food Group | Singapore Reinsurance vs. Austevoll Seafood ASA | Singapore Reinsurance vs. CORNISH METALS INC |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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