Correlation Between First Insurance and Andes Technology

Can any of the company-specific risk be diversified away by investing in both First Insurance and Andes 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 First Insurance and Andes Technology 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 Andes Technology Corp, you can compare the effects of market volatilities on First Insurance and Andes 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 First Insurance with a short position of Andes Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Insurance and Andes Technology.

Diversification Opportunities for First Insurance and Andes Technology

-0.14

Correlation Coefficient

First Insurance  Andes Technology

Good diversification

The 3 months correlation between First and Andes is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding First Insurance Co and Andes Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andes Technology 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 Andes Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andes Technology Corp has no effect on the direction of First Insurance i.e., First Insurance and Andes Technology go up and down completely randomly.

Pair Corralation between First Insurance and Andes Technology

Assuming the 90 days trading horizon First Insurance Co is expected to generate 0.56 times more return on investment than Andes Technology. However, First Insurance Co is 1.78 times less risky than Andes Technology. It trades about 0.02 of its potential returns per unit of risk. Andes Technology Corp is currently generating about 0.01 per unit of risk. If you would invest  2,445  in First Insurance Co on September 29, 2024 and sell it today you would earn a total of  40.00  from holding First Insurance Co or generate 1.64% return on investment over 90 days.

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

First Insurance Co  vs.  Andes Technology Corp

First Insurance

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Insurance Co are ranked lower than 12 (%) 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.

Andes Technology Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Andes Technology Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Andes Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with First Insurance and Andes Technology

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

The idea behind First Insurance Co and Andes Technology Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.