Correlation Between First Insurance and Ma Kuang

Can any of the company-specific risk be diversified away by investing in both First Insurance and Ma Kuang 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 Ma Kuang 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 Ma Kuang Healthcare, you can compare the effects of market volatilities on First Insurance and Ma Kuang 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 Ma Kuang. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Insurance and Ma Kuang.

Diversification Opportunities for First Insurance and Ma Kuang

-0.52

Correlation Coefficient

First Insurance  Ma Kuang

Excellent diversification

The 3 months correlation between First and 4139 is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding First Insurance Co and Ma Kuang Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ma Kuang Healthcare 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 Ma Kuang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ma Kuang Healthcare has no effect on the direction of First Insurance i.e., First Insurance and Ma Kuang go up and down completely randomly.

Pair Corralation between First Insurance and Ma Kuang

Assuming the 90 days trading horizon First Insurance Co is expected to generate 0.89 times more return on investment than Ma Kuang. However, First Insurance Co is 1.12 times less risky than Ma Kuang. It trades about 0.25 of its potential returns per unit of risk. Ma Kuang Healthcare is currently generating about -0.08 per unit of risk. If you would invest  2,405  in First Insurance Co on September 15, 2024 and sell it today you would earn a total of  110.00  from holding First Insurance Co or generate 4.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

First Insurance Co  vs.  Ma Kuang Healthcare

First Insurance

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Insurance Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, First Insurance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ma Kuang Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with First Insurance and Ma Kuang

The main advantage of trading using opposite First Insurance and Ma Kuang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Insurance position performs unexpectedly, Ma Kuang 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 Ma Kuang will offset losses from the drop in Ma Kuang's long position.

The idea behind First Insurance Co and Ma Kuang Healthcare 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.