Correlation Between Safety Insurance and China BlueChemical
Can any of the company-specific risk be diversified away by investing in both Safety Insurance and China BlueChemical 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 Safety Insurance and China BlueChemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safety Insurance Group and China BlueChemical, you can compare the effects of market volatilities on Safety Insurance and China BlueChemical 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 Safety Insurance with a short position of China BlueChemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safety Insurance and China BlueChemical.
Diversification Opportunities for Safety Insurance and China BlueChemical
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Safety and China is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Safety Insurance Group and China BlueChemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China BlueChemical and Safety 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 Safety Insurance Group are associated (or correlated) with China BlueChemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China BlueChemical has no effect on the direction of Safety Insurance i.e., Safety Insurance and China BlueChemical go up and down completely randomly.
Pair Corralation between Safety Insurance and China BlueChemical
Assuming the 90 days horizon Safety Insurance Group is expected to generate 0.4 times more return on investment than China BlueChemical. However, Safety Insurance Group is 2.51 times less risky than China BlueChemical. It trades about 0.14 of its potential returns per unit of risk. China BlueChemical is currently generating about 0.02 per unit of risk. If you would invest 7,300 in Safety Insurance Group on September 3, 2024 and sell it today you would earn a total of 700.00 from holding Safety Insurance Group or generate 9.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Safety Insurance Group vs. China BlueChemical
Performance |
| Timeline |
| Safety Insurance |
| China BlueChemical |
Safety Insurance and China BlueChemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safety Insurance and China BlueChemical
The main advantage of trading using opposite Safety Insurance and China BlueChemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Insurance position performs unexpectedly, China BlueChemical 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 BlueChemical will offset losses from the drop in China BlueChemical's long position.| Safety Insurance vs. Sims Metal Management | Safety Insurance vs. Flutter Entertainment PLC | Safety Insurance vs. TOWNSQUARE MEDIA INC | Safety Insurance vs. RCS MediaGroup SpA |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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