Correlation Between Central Reinsurance and Connection Technology

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Central Reinsurance and Connection Technology 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 Central Reinsurance and Connection Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Reinsurance Corp and Connection Technology Systems, you can compare the effects of market volatilities on Central Reinsurance and Connection Technology 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 Central Reinsurance with a short position of Connection Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Reinsurance and Connection Technology.

Diversification Opportunities for Central Reinsurance and Connection Technology

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between Central and Connection is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Central Reinsurance Corp and Connection Technology Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Connection Technology and Central Reinsurance 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 Central Reinsurance Corp are associated (or correlated) with Connection Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Connection Technology has no effect on the direction of Central Reinsurance i.e., Central Reinsurance and Connection Technology go up and down completely randomly.

Pair Corralation between Central Reinsurance and Connection Technology

Assuming the 90 days trading horizon Central Reinsurance Corp is expected to generate 0.44 times more return on investment than Connection Technology. However, Central Reinsurance Corp is 2.25 times less risky than Connection Technology. It trades about 0.06 of its potential returns per unit of risk. Connection Technology Systems is currently generating about -0.01 per unit of risk. If you would invest  1,850  in Central Reinsurance Corp on October 24, 2024 and sell it today you would earn a total of  705.00  from holding Central Reinsurance Corp or generate 38.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.8%
ValuesDaily Returns

Central Reinsurance Corp  vs.  Connection Technology Systems

 Performance 
       Timeline  
Central Reinsurance Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Central Reinsurance Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Central Reinsurance is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
Connection Technology 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Connection Technology Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Central Reinsurance and Connection Technology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Central Reinsurance and Connection Technology

The main advantage of trading using opposite Central Reinsurance and Connection Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Reinsurance position performs unexpectedly, Connection Technology 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 Connection Technology will offset losses from the drop in Connection Technology's long position.
The idea behind Central Reinsurance Corp and Connection Technology Systems 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.
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

Other Complementary Tools

Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Latest Portfolios
Quick portfolio dashboard that showcases your latest portfolios
Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance
Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities