Correlation Between Din Capital and PVI Reinsurance

Can any of the company-specific risk be diversified away by investing in both Din Capital and PVI Reinsurance 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 Din Capital and PVI Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Din Capital Investment and PVI Reinsurance Corp, you can compare the effects of market volatilities on Din Capital and PVI Reinsurance 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 Din Capital with a short position of PVI Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Din Capital and PVI Reinsurance.

Diversification Opportunities for Din Capital and PVI Reinsurance

0.37

Correlation Coefficient

Din Capital  PVI Reinsurance

Weak diversification

The 3 months correlation between Din and PVI is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Din Capital Investment and PVI Reinsurance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PVI Reinsurance Corp and Din Capital 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 Din Capital Investment are associated (or correlated) with PVI Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PVI Reinsurance Corp has no effect on the direction of Din Capital i.e., Din Capital and PVI Reinsurance go up and down completely randomly.

Pair Corralation between Din Capital and PVI Reinsurance

Assuming the 90 days trading horizon Din Capital Investment is expected to under-perform the PVI Reinsurance. But the stock apears to be less risky and, when comparing its historical volatility, Din Capital Investment is 2.87 times less risky than PVI Reinsurance. The stock trades about -0.09 of its potential returns per unit of risk. The PVI Reinsurance Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,960,000  in PVI Reinsurance Corp on October 25, 2024 and sell it today you would lose (30,000) from holding PVI Reinsurance Corp or give up 1.53% of portfolio value over 90 days.

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

Din Capital Investment  vs.  PVI Reinsurance Corp

Din Capital Investment

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Din Capital Investment are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Din Capital displayed solid returns over the last few months and may actually be approaching a breakup point.

PVI Reinsurance Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PVI Reinsurance Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, PVI Reinsurance is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Din Capital and PVI Reinsurance

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

The idea behind Din Capital Investment and PVI Reinsurance 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.