Correlation Between Military Insurance and Global Electrical
Can any of the company-specific risk be diversified away by investing in both Military Insurance and Global Electrical 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 Military Insurance and Global Electrical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Military Insurance Corp and Global Electrical Technology, you can compare the effects of market volatilities on Military Insurance and Global Electrical 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 Military Insurance with a short position of Global Electrical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Military Insurance and Global Electrical.
Diversification Opportunities for Military Insurance and Global Electrical
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Military and Global is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Military Insurance Corp and Global Electrical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Electrical and Military Insurance 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 Military Insurance Corp are associated (or correlated) with Global Electrical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Electrical has no effect on the direction of Military Insurance i.e., Military Insurance and Global Electrical go up and down completely randomly.
Pair Corralation between Military Insurance and Global Electrical
Assuming the 90 days trading horizon Military Insurance Corp is expected to generate 0.15 times more return on investment than Global Electrical. However, Military Insurance Corp is 6.57 times less risky than Global Electrical. It trades about -0.01 of its potential returns per unit of risk. Global Electrical Technology is currently generating about -0.1 per unit of risk. If you would invest 1,695,000 in Military Insurance Corp on August 30, 2024 and sell it today you would lose (5,000) from holding Military Insurance Corp or give up 0.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 56.52% |
| Values | Daily Returns |
Military Insurance Corp vs. Global Electrical Technology
Performance |
| Timeline |
| Military Insurance Corp |
| Global Electrical |
Military Insurance and Global Electrical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Military Insurance and Global Electrical
The main advantage of trading using opposite Military Insurance and Global Electrical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Military Insurance position performs unexpectedly, Global Electrical 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 Global Electrical will offset losses from the drop in Global Electrical's long position.| Military Insurance vs. Petrolimex Insurance Corp | Military Insurance vs. Hanoi Beer Alcohol | Military Insurance vs. Elcom Technology Communications | Military Insurance vs. IDJ FINANCIAL |
| Global Electrical vs. PetroVietnam Transportation Corp | Global Electrical vs. Travel Investment and | Global Electrical vs. Nam Long Investment | Global Electrical vs. Ba Ria Thermal |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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