Correlation Between Selective Insurance and Guangdong Investment
Can any of the company-specific risk be diversified away by investing in both Selective Insurance and Guangdong Investment 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 Selective Insurance and Guangdong Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Selective Insurance Group and Guangdong Investment Limited, you can compare the effects of market volatilities on Selective Insurance and Guangdong Investment 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 Selective Insurance with a short position of Guangdong Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selective Insurance and Guangdong Investment.
Diversification Opportunities for Selective Insurance and Guangdong Investment
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Selective and Guangdong is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Selective Insurance Group and Guangdong Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Investment and Selective 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 Selective Insurance Group are associated (or correlated) with Guangdong Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Investment has no effect on the direction of Selective Insurance i.e., Selective Insurance and Guangdong Investment go up and down completely randomly.
Pair Corralation between Selective Insurance and Guangdong Investment
Given the investment horizon of 90 days Selective Insurance Group is expected to under-perform the Guangdong Investment. But the stock apears to be less risky and, when comparing its historical volatility, Selective Insurance Group is 4.89 times less risky than Guangdong Investment. The stock trades about -0.19 of its potential returns per unit of risk. The Guangdong Investment Limited is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 61.00 in Guangdong Investment Limited on October 28, 2024 and sell it today you would earn a total of 19.00 from holding Guangdong Investment Limited or generate 31.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Selective Insurance Group vs. Guangdong Investment Limited
Performance |
| Timeline |
| Selective Insurance |
| Guangdong Investment |
Selective Insurance and Guangdong Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Selective Insurance and Guangdong Investment
The main advantage of trading using opposite Selective Insurance and Guangdong Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Selective Insurance position performs unexpectedly, Guangdong Investment 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 Guangdong Investment will offset losses from the drop in Guangdong Investment's long position.| Selective Insurance vs. Kemper | Selective Insurance vs. Donegal Group B | Selective Insurance vs. Argo Group International | Selective Insurance vs. Global Indemnity PLC |
| Guangdong Investment vs. Essential Utilities | Guangdong Investment vs. Guangdong Investment | Guangdong Investment vs. Anhui Conch Cement | Guangdong Investment vs. Beijing Enterprises Water |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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