Correlation Between National Reinsurance and Converge Information
Can any of the company-specific risk be diversified away by investing in both National Reinsurance and Converge Information 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 National Reinsurance and Converge Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Reinsurance and Converge Information Communications, you can compare the effects of market volatilities on National Reinsurance and Converge Information 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 National Reinsurance with a short position of Converge Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Reinsurance and Converge Information.
Diversification Opportunities for National Reinsurance and Converge Information
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between National and Converge is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding National Reinsurance and Converge Information Communica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Converge Information and National Reinsurance 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 National Reinsurance are associated (or correlated) with Converge Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Converge Information has no effect on the direction of National Reinsurance i.e., National Reinsurance and Converge Information go up and down completely randomly.
Pair Corralation between National Reinsurance and Converge Information
Assuming the 90 days trading horizon National Reinsurance is expected to generate 1.87 times less return on investment than Converge Information. In addition to that, National Reinsurance is 1.47 times more volatile than Converge Information Communications. It trades about 0.05 of its total potential returns per unit of risk. Converge Information Communications is currently generating about 0.14 per unit of volatility. If you would invest 1,638 in Converge Information Communications on October 22, 2024 and sell it today you would earn a total of 58.00 from holding Converge Information Communications or generate 3.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Reinsurance vs. Converge Information Communica
Performance |
| Timeline |
| National Reinsurance |
| Converge Information |
National Reinsurance and Converge Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Reinsurance and Converge Information
The main advantage of trading using opposite National Reinsurance and Converge Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Reinsurance position performs unexpectedly, Converge Information 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 Converge Information will offset losses from the drop in Converge Information's long position.| National Reinsurance vs. Atlas Consolidated Mining | National Reinsurance vs. Premiere Entertainment | National Reinsurance vs. Apex Mining Co | National Reinsurance vs. Top Frontier Investment |
| Converge Information vs. Semirara Mining Corp | Converge Information vs. Apex Mining Co | Converge Information vs. Globe Telecom | Converge Information vs. Philex Mining Corp |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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