Correlation Between First Insurance and Sesoda Corp
Can any of the company-specific risk be diversified away by investing in both First Insurance and Sesoda Corp 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 Sesoda Corp 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 Sesoda Corp, you can compare the effects of market volatilities on First Insurance and Sesoda Corp 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 Sesoda Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Insurance and Sesoda Corp.
Diversification Opportunities for First Insurance and Sesoda Corp
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between First and Sesoda is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding First Insurance Co and Sesoda Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sesoda Corp 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 Sesoda Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sesoda Corp has no effect on the direction of First Insurance i.e., First Insurance and Sesoda Corp go up and down completely randomly.
Pair Corralation between First Insurance and Sesoda Corp
Assuming the 90 days trading horizon First Insurance Co is expected to generate 0.59 times more return on investment than Sesoda Corp. However, First Insurance Co is 1.7 times less risky than Sesoda Corp. It trades about -0.07 of its potential returns per unit of risk. Sesoda Corp is currently generating about -0.39 per unit of risk. If you would invest 2,455 in First Insurance Co on September 24, 2024 and sell it today you would lose (35.00) from holding First Insurance Co or give up 1.43% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
First Insurance Co vs. Sesoda Corp
Performance |
Timeline |
First Insurance |
Sesoda Corp |
First Insurance and Sesoda Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Insurance and Sesoda Corp
The main advantage of trading using opposite First Insurance and Sesoda Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Insurance position performs unexpectedly, Sesoda Corp 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 Sesoda Corp will offset losses from the drop in Sesoda Corp'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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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