Correlation Between United Fire and China Teletech
Can any of the company-specific risk be diversified away by investing in both United Fire and China Teletech 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 United Fire and China Teletech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Fire Group and China Teletech Holding, you can compare the effects of market volatilities on United Fire and China Teletech 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 United Fire with a short position of China Teletech. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Fire and China Teletech.
Diversification Opportunities for United Fire and China Teletech
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and China is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding United Fire Group and China Teletech Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Teletech Holding and United Fire 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 United Fire Group are associated (or correlated) with China Teletech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Teletech Holding has no effect on the direction of United Fire i.e., United Fire and China Teletech go up and down completely randomly.
Pair Corralation between United Fire and China Teletech
Given the investment horizon of 90 days United Fire Group is expected to generate 0.15 times more return on investment than China Teletech. However, United Fire Group is 6.87 times less risky than China Teletech. It trades about 0.42 of its potential returns per unit of risk. China Teletech Holding is currently generating about 0.05 per unit of risk. If you would invest 1,932 in United Fire Group on September 3, 2024 and sell it today you would earn a total of 1,128 from holding United Fire Group or generate 58.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Fire Group vs. China Teletech Holding
Performance |
| Timeline |
| United Fire Group |
| China Teletech Holding |
United Fire and China Teletech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Fire and China Teletech
The main advantage of trading using opposite United Fire and China Teletech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Fire position performs unexpectedly, China Teletech 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 Teletech will offset losses from the drop in China Teletech's long position.| United Fire vs. Donegal Group B | United Fire vs. Horace Mann Educators | United Fire vs. Donegal Group A | United Fire vs. Global Indemnity PLC |
| China Teletech vs. Oncologix Tech | China Teletech vs. Aqua Power Systems | China Teletech vs. TransAKT | China Teletech vs. China Health Management |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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