Correlation Between Reinsurance Group and CHINA WATER
Can any of the company-specific risk be diversified away by investing in both Reinsurance Group and CHINA WATER 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 Reinsurance Group and CHINA WATER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reinsurance Group of and CHINA WATER IGR, you can compare the effects of market volatilities on Reinsurance Group and CHINA WATER 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 Reinsurance Group with a short position of CHINA WATER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reinsurance Group and CHINA WATER.
Diversification Opportunities for Reinsurance Group and CHINA WATER
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Reinsurance and CHINA is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of and CHINA WATER IGR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA WATER IGR and Reinsurance Group 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 Reinsurance Group of are associated (or correlated) with CHINA WATER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA WATER IGR has no effect on the direction of Reinsurance Group i.e., Reinsurance Group and CHINA WATER go up and down completely randomly.
Pair Corralation between Reinsurance Group and CHINA WATER
Assuming the 90 days trading horizon Reinsurance Group of is expected to generate 0.09 times more return on investment than CHINA WATER. However, Reinsurance Group of is 10.92 times less risky than CHINA WATER. It trades about 0.32 of its potential returns per unit of risk. CHINA WATER IGR is currently generating about -0.24 per unit of risk. If you would invest 19,800 in Reinsurance Group of on October 24, 2024 and sell it today you would earn a total of 1,600 from holding Reinsurance Group of or generate 8.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reinsurance Group of vs. CHINA WATER IGR
Performance |
| Timeline |
| Reinsurance Group |
| CHINA WATER IGR |
Reinsurance Group and CHINA WATER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reinsurance Group and CHINA WATER
The main advantage of trading using opposite Reinsurance Group and CHINA WATER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reinsurance Group position performs unexpectedly, CHINA WATER 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 CHINA WATER will offset losses from the drop in CHINA WATER's long position.| Reinsurance Group vs. Granite Construction | Reinsurance Group vs. North American Construction | Reinsurance Group vs. ALEFARM BREWING DK 05 | Reinsurance Group vs. Lendlease Group |
| CHINA WATER vs. SILVER BULLET DATA | CHINA WATER vs. Linedata Services SA | CHINA WATER vs. The Hanover Insurance | CHINA WATER vs. Reinsurance Group of |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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