Correlation Between Hai An and Military Insurance

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

By analyzing existing cross correlation between Hai An Transport and Military Insurance Corp, you can compare the effects of market volatilities on Hai An and Military 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 Hai An with a short position of Military Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hai An and Military Insurance.

Diversification Opportunities for Hai An and Military Insurance

0.65

Correlation Coefficient

Hai An  Military Insurance

Poor diversification

The 3 months correlation between Hai and Military is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Hai An Transport and Military Insurance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Military Insurance Corp and Hai An 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 Hai An Transport are associated (or correlated) with Military Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Military Insurance Corp has no effect on the direction of Hai An i.e., Hai An and Military Insurance go up and down completely randomly.

Pair Corralation between Hai An and Military Insurance

Assuming the 90 days trading horizon Hai An Transport is expected to generate 0.58 times more return on investment than Military Insurance. However, Hai An Transport is 1.73 times less risky than Military Insurance. It trades about 0.36 of its potential returns per unit of risk. Military Insurance Corp is currently generating about 0.13 per unit of risk. If you would invest  4,400,000  in Hai An Transport on September 20, 2024 and sell it today you would earn a total of  535,000  from holding Hai An Transport or generate 12.16% return on investment over 90 days.

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

Hai An Transport  vs.  Military Insurance Corp

Hai An Transport

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hai An Transport are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, Hai An displayed solid returns over the last few months and may actually be approaching a breakup point.

Military Insurance Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Military Insurance Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Military Insurance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hai An and Military Insurance

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

The idea behind Hai An Transport and Military Insurance 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.