Correlation Between Pacificonline Systems and National Reinsurance
Can any of the company-specific risk be diversified away by investing in both Pacificonline Systems 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 Pacificonline Systems and National Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacificonline Systems and National Reinsurance, you can compare the effects of market volatilities on Pacificonline Systems 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 Pacificonline Systems with a short position of National Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacificonline Systems and National Reinsurance.
Diversification Opportunities for Pacificonline Systems and National Reinsurance
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pacificonline and National is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Pacificonline Systems and National Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Reinsurance and Pacificonline Systems 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 Pacificonline Systems 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 Pacificonline Systems i.e., Pacificonline Systems and National Reinsurance go up and down completely randomly.
Pair Corralation between Pacificonline Systems and National Reinsurance
Assuming the 90 days trading horizon Pacificonline Systems is expected to generate 2.39 times more return on investment than National Reinsurance. However, Pacificonline Systems is 2.39 times more volatile than National Reinsurance. It trades about 0.38 of its potential returns per unit of risk. National Reinsurance is currently generating about 0.04 per unit of risk. If you would invest 258.00 in Pacificonline Systems on October 20, 2024 and sell it today you would earn a total of 134.00 from holding Pacificonline Systems or generate 51.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacificonline Systems vs. National Reinsurance
Performance |
| Timeline |
| Pacificonline Systems |
| National Reinsurance |
Pacificonline Systems and National Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacificonline Systems and National Reinsurance
The main advantage of trading using opposite Pacificonline Systems and National Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacificonline Systems 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.| Pacificonline Systems vs. Cebu Air Preferred | Pacificonline Systems vs. Metro Retail Stores | Pacificonline Systems vs. Apex Mining Co | Pacificonline Systems vs. Manila Mining Corp |
| National Reinsurance vs. Jollibee Foods Corp | National Reinsurance vs. Philex Mining Corp | National Reinsurance vs. Metropolitan Bank Trust | National Reinsurance vs. BDO Unibank |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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