Correlation Between SHOU HLDGS and REVO INSURANCE
Can any of the company-specific risk be diversified away by investing in both SHOU HLDGS and REVO 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 SHOU HLDGS and REVO INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SHOU HLDGS LTD and REVO INSURANCE SPA, you can compare the effects of market volatilities on SHOU HLDGS and REVO 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 SHOU HLDGS with a short position of REVO INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHOU HLDGS and REVO INSURANCE.
Diversification Opportunities for SHOU HLDGS and REVO INSURANCE
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SHOU and REVO is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding SHOU HLDGS LTD and REVO INSURANCE SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REVO INSURANCE SPA and SHOU HLDGS 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 SHOU HLDGS LTD are associated (or correlated) with REVO INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REVO INSURANCE SPA has no effect on the direction of SHOU HLDGS i.e., SHOU HLDGS and REVO INSURANCE go up and down completely randomly.
Pair Corralation between SHOU HLDGS and REVO INSURANCE
Assuming the 90 days trading horizon SHOU HLDGS is expected to generate 4.0 times less return on investment than REVO INSURANCE. In addition to that, SHOU HLDGS is 2.6 times more volatile than REVO INSURANCE SPA. It trades about 0.02 of its total potential returns per unit of risk. REVO INSURANCE SPA is currently generating about 0.18 per unit of volatility. If you would invest 1,000.00 in REVO INSURANCE SPA on August 30, 2024 and sell it today you would earn a total of 60.00 from holding REVO INSURANCE SPA or generate 6.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SHOU HLDGS LTD vs. REVO INSURANCE SPA
Performance |
| Timeline |
| SHOU HLDGS LTD |
| REVO INSURANCE SPA |
SHOU HLDGS and REVO INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SHOU HLDGS and REVO INSURANCE
The main advantage of trading using opposite SHOU HLDGS and REVO INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHOU HLDGS position performs unexpectedly, REVO 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 REVO INSURANCE will offset losses from the drop in REVO INSURANCE's long position.| SHOU HLDGS vs. REVO INSURANCE SPA | SHOU HLDGS vs. Penn National Gaming | SHOU HLDGS vs. CI GAMES SA | SHOU HLDGS vs. FUTURE GAMING GRP |
| REVO INSURANCE vs. COMBA TELECOM SYST | REVO INSURANCE vs. Mobilezone Holding AG | REVO INSURANCE vs. Highlight Communications AG | REVO INSURANCE vs. Entravision Communications |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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