Correlation Between WinMate Communication and First Insurance

Can any of the company-specific risk be diversified away by investing in both WinMate Communication and First Insurance 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 WinMate Communication and First Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WinMate Communication INC and First Insurance Co, you can compare the effects of market volatilities on WinMate Communication and First Insurance 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 WinMate Communication with a short position of First Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of WinMate Communication and First Insurance.

Diversification Opportunities for WinMate Communication and First Insurance

0.79

Correlation Coefficient

WinMate Communication  First Insurance

Poor diversification

The 3 months correlation between WinMate and First is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding WinMate Communication INC and First Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Insurance and WinMate Communication 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 WinMate Communication INC are associated (or correlated) with First Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Insurance has no effect on the direction of WinMate Communication i.e., WinMate Communication and First Insurance go up and down completely randomly.

Pair Corralation between WinMate Communication and First Insurance

Assuming the 90 days trading horizon WinMate Communication is expected to generate 2.46 times less return on investment than First Insurance. In addition to that, WinMate Communication is 1.9 times more volatile than First Insurance Co. It trades about 0.06 of its total potential returns per unit of risk. First Insurance Co is currently generating about 0.26 per unit of volatility. If you would invest  2,235  in First Insurance Co on September 13, 2024 and sell it today you would earn a total of  315.00  from holding First Insurance Co or generate 14.09% return on investment over 90 days.

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

WinMate Communication INC  vs.  First Insurance Co

WinMate Communication INC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WinMate Communication INC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, WinMate Communication is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

First Insurance

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Insurance Co are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, First Insurance showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WinMate Communication and First Insurance

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

The idea behind WinMate Communication INC and First Insurance Co 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 CEOs Directory module to screen CEOs from public companies around the world.