Correlation Between City Retail and Victoria Insurance
Can any of the company-specific risk be diversified away by investing in both City Retail and Victoria 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 City Retail and Victoria Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between City Retail Developments and Victoria Insurance Tbk, you can compare the effects of market volatilities on City Retail and Victoria 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 City Retail with a short position of Victoria Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Retail and Victoria Insurance.
Diversification Opportunities for City Retail and Victoria Insurance
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between City and Victoria is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding City Retail Developments and Victoria Insurance Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victoria Insurance Tbk and City Retail 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 City Retail Developments are associated (or correlated) with Victoria Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victoria Insurance Tbk has no effect on the direction of City Retail i.e., City Retail and Victoria Insurance go up and down completely randomly.
Pair Corralation between City Retail and Victoria Insurance
Assuming the 90 days trading horizon City Retail Developments is expected to generate 1.05 times more return on investment than Victoria Insurance. However, City Retail is 1.05 times more volatile than Victoria Insurance Tbk. It trades about 0.0 of its potential returns per unit of risk. Victoria Insurance Tbk is currently generating about -0.28 per unit of risk. If you would invest 13,500 in City Retail Developments on August 27, 2024 and sell it today you would earn a total of 0.00 from holding City Retail Developments or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
City Retail Developments vs. Victoria Insurance Tbk
Performance |
| Timeline |
| City Retail Developments |
| Victoria Insurance Tbk |
City Retail and Victoria Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Retail and Victoria Insurance
The main advantage of trading using opposite City Retail and Victoria Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Retail position performs unexpectedly, Victoria 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 Victoria Insurance will offset losses from the drop in Victoria Insurance's long position.| City Retail vs. Metropolitan Land Tbk | City Retail vs. Bekasi Fajar Industrial | City Retail vs. Greenwood Sejahtera Tbk | City Retail vs. Metropolitan Kentjana Tbk |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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