Correlation Between Chahua Modern and Peoples Insurance

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

By analyzing existing cross correlation between Chahua Modern Housewares and Peoples Insurance of, you can compare the effects of market volatilities on Chahua Modern and Peoples 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 Chahua Modern with a short position of Peoples Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chahua Modern and Peoples Insurance.

Diversification Opportunities for Chahua Modern and Peoples Insurance

0.31

Correlation Coefficient

Chahua Modern  Peoples Insurance

Weak diversification

The 3 months correlation between Chahua and Peoples is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Chahua Modern Housewares and Peoples Insurance of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peoples Insurance and Chahua Modern 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 Chahua Modern Housewares are associated (or correlated) with Peoples Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peoples Insurance has no effect on the direction of Chahua Modern i.e., Chahua Modern and Peoples Insurance go up and down completely randomly.

Pair Corralation between Chahua Modern and Peoples Insurance

Assuming the 90 days trading horizon Chahua Modern Housewares is expected to generate 1.98 times more return on investment than Peoples Insurance. However, Chahua Modern is 1.98 times more volatile than Peoples Insurance of. It trades about 0.01 of its potential returns per unit of risk. Peoples Insurance of is currently generating about -0.16 per unit of risk. If you would invest  2,103  in Chahua Modern Housewares on October 7, 2024 and sell it today you would lose (16.00) from holding Chahua Modern Housewares or give up 0.76% of portfolio value over 90 days.

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

Chahua Modern Housewares  vs.  Peoples Insurance of

Chahua Modern Housewares

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chahua Modern Housewares are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chahua Modern sustained solid returns over the last few months and may actually be approaching a breakup point.

Peoples Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Peoples Insurance of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Chahua Modern and Peoples Insurance

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

The idea behind Chahua Modern Housewares and Peoples Insurance of 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 Commodity Directory module to find actively traded commodities issued by global exchanges.