Correlation Between National Reinsurance and First Abacus
Can any of the company-specific risk be diversified away by investing in both National Reinsurance and First Abacus 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 First Abacus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Reinsurance and First Abacus Financial, you can compare the effects of market volatilities on National Reinsurance and First Abacus 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 First Abacus. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Reinsurance and First Abacus.
Diversification Opportunities for National Reinsurance and First Abacus
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and First is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding National Reinsurance and First Abacus Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Abacus Financial 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 First Abacus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Abacus Financial has no effect on the direction of National Reinsurance i.e., National Reinsurance and First Abacus go up and down completely randomly.
Pair Corralation between National Reinsurance and First Abacus
Assuming the 90 days trading horizon National Reinsurance is expected to generate 1.6 times more return on investment than First Abacus. However, National Reinsurance is 1.6 times more volatile than First Abacus Financial. It trades about 0.08 of its potential returns per unit of risk. First Abacus Financial is currently generating about 0.03 per unit of risk. If you would invest 38.00 in National Reinsurance on August 25, 2024 and sell it today you would earn a total of 21.00 from holding National Reinsurance or generate 55.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 22.92% |
| Values | Daily Returns |
National Reinsurance vs. First Abacus Financial
Performance |
| Timeline |
| National Reinsurance |
| First Abacus Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
National Reinsurance and First Abacus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Reinsurance and First Abacus
The main advantage of trading using opposite National Reinsurance and First Abacus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Reinsurance position performs unexpectedly, First Abacus 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 First Abacus will offset losses from the drop in First Abacus' long position.| National Reinsurance vs. Manulife Financial Corp | National Reinsurance vs. Allhome Corp | National Reinsurance vs. Jollibee Foods Corp | National Reinsurance vs. LFM Properties Corp |
| First Abacus vs. Bright Kindle Resources | First Abacus vs. Allhome Corp | First Abacus vs. Jollibee Foods Corp | First Abacus vs. LFM Properties 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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