Correlation Between Century Synthetic and Military Insurance
Can any of the company-specific risk be diversified away by investing in both Century Synthetic and Military 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 Century Synthetic and Military Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Synthetic Fiber and Military Insurance Corp, you can compare the effects of market volatilities on Century Synthetic and Military 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 Century Synthetic with a short position of Military Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Synthetic and Military Insurance.
Diversification Opportunities for Century Synthetic and Military Insurance
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Century and Military is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Century Synthetic Fiber and Military Insurance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Military Insurance Corp and Century Synthetic 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 Century Synthetic Fiber are associated (or correlated) with Military Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Military Insurance Corp has no effect on the direction of Century Synthetic i.e., Century Synthetic and Military Insurance go up and down completely randomly.
Pair Corralation between Century Synthetic and Military Insurance
Assuming the 90 days trading horizon Century Synthetic Fiber is expected to under-perform the Military Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Century Synthetic Fiber is 1.2 times less risky than Military Insurance. The stock trades about -0.03 of its potential returns per unit of risk. The Military Insurance Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,830,000 in Military Insurance Corp on September 4, 2024 and sell it today you would earn a total of 30,000 from holding Military Insurance Corp or generate 1.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Synthetic Fiber vs. Military Insurance Corp
Performance |
| Timeline |
| Century Synthetic Fiber |
| Military Insurance Corp |
Century Synthetic and Military Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Synthetic and Military Insurance
The main advantage of trading using opposite Century Synthetic and Military Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Synthetic position performs unexpectedly, Military 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 Military Insurance will offset losses from the drop in Military Insurance's long position.The idea behind Century Synthetic Fiber and Military Insurance Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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