Correlation Between Carsales and Singapore ReinsuranceLimit
Can any of the company-specific risk be diversified away by investing in both Carsales and Singapore ReinsuranceLimit 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 Carsales and Singapore ReinsuranceLimit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carsales and Singapore Reinsurance, you can compare the effects of market volatilities on Carsales and Singapore ReinsuranceLimit 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 Carsales with a short position of Singapore ReinsuranceLimit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and Singapore ReinsuranceLimit.
Diversification Opportunities for Carsales and Singapore ReinsuranceLimit
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Carsales and Singapore is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Carsales and Singapore Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore ReinsuranceLimit and Carsales 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 Carsales are associated (or correlated) with Singapore ReinsuranceLimit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore ReinsuranceLimit has no effect on the direction of Carsales i.e., Carsales and Singapore ReinsuranceLimit go up and down completely randomly.
Pair Corralation between Carsales and Singapore ReinsuranceLimit
Assuming the 90 days trading horizon Carsales is expected to generate 1.96 times less return on investment than Singapore ReinsuranceLimit. But when comparing it to its historical volatility, Carsales is 1.55 times less risky than Singapore ReinsuranceLimit. It trades about 0.1 of its potential returns per unit of risk. Singapore Reinsurance is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,520 in Singapore Reinsurance on September 3, 2024 and sell it today you would earn a total of 1,040 from holding Singapore Reinsurance or generate 41.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carsales vs. Singapore Reinsurance
Performance |
| Timeline |
| Carsales |
| Singapore ReinsuranceLimit |
Carsales and Singapore ReinsuranceLimit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carsales and Singapore ReinsuranceLimit
The main advantage of trading using opposite Carsales and Singapore ReinsuranceLimit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carsales position performs unexpectedly, Singapore ReinsuranceLimit 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 Singapore ReinsuranceLimit will offset losses from the drop in Singapore ReinsuranceLimit's long position.| Carsales vs. Thai Beverage Public | Carsales vs. Premier Foods PLC | Carsales vs. Food Life Companies | Carsales vs. CN MODERN DAIRY |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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