Correlation Between First Insurance and Wei Chuan
Can any of the company-specific risk be diversified away by investing in both First Insurance and Wei Chuan 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 First Insurance and Wei Chuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Insurance Co and Wei Chuan Foods, you can compare the effects of market volatilities on First Insurance and Wei Chuan 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 First Insurance with a short position of Wei Chuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Insurance and Wei Chuan.
Diversification Opportunities for First Insurance and Wei Chuan
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between First and Wei is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding First Insurance Co and Wei Chuan Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wei Chuan Foods and First 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 First Insurance Co are associated (or correlated) with Wei Chuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wei Chuan Foods has no effect on the direction of First Insurance i.e., First Insurance and Wei Chuan go up and down completely randomly.
Pair Corralation between First Insurance and Wei Chuan
Assuming the 90 days trading horizon First Insurance Co is expected to generate 2.65 times more return on investment than Wei Chuan. However, First Insurance is 2.65 times more volatile than Wei Chuan Foods. It trades about 0.34 of its potential returns per unit of risk. Wei Chuan Foods is currently generating about 0.03 per unit of risk. If you would invest 2,500 in First Insurance Co on December 5, 2024 and sell it today you would earn a total of 245.00 from holding First Insurance Co or generate 9.8% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
First Insurance Co vs. Wei Chuan Foods
Performance |
Timeline |
First Insurance |
Wei Chuan Foods |
First Insurance and Wei Chuan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Insurance and Wei Chuan
The main advantage of trading using opposite First Insurance and Wei Chuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Insurance position performs unexpectedly, Wei Chuan 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 Wei Chuan will offset losses from the drop in Wei Chuan's long position.First Insurance vs. EnTie Commercial Bank | First Insurance vs. Union Bank of | First Insurance vs. Bank of Kaohsiung | First Insurance vs. Taiwan Business Bank |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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