Correlation Between PICC Property and Cincinnati Financial

Can any of the company-specific risk be diversified away by investing in both PICC Property and Cincinnati Financial 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 PICC Property and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PICC Property and and Cincinnati Financial, you can compare the effects of market volatilities on PICC Property and Cincinnati Financial 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 PICC Property with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of PICC Property and Cincinnati Financial.

Diversification Opportunities for PICC Property and Cincinnati Financial

-0.75

Correlation Coefficient

PICC Property  Cincinnati Financial

Pay attention - limited upside

The 3 months correlation between PICC and Cincinnati is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding PICC Property and and Cincinnati Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Financial and PICC Property 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 PICC Property and are associated (or correlated) with Cincinnati Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cincinnati Financial has no effect on the direction of PICC Property i.e., PICC Property and Cincinnati Financial go up and down completely randomly.

Pair Corralation between PICC Property and Cincinnati Financial

Assuming the 90 days horizon PICC Property and is expected to generate 4.09 times more return on investment than Cincinnati Financial. However, PICC Property is 4.09 times more volatile than Cincinnati Financial. It trades about 0.1 of its potential returns per unit of risk. Cincinnati Financial is currently generating about 0.04 per unit of risk. If you would invest  18.00  in PICC Property and on November 28, 2024 and sell it today you would earn a total of  142.00  from holding PICC Property and or generate 788.89% return on investment over 90 days.

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

PICC Property and  vs.  Cincinnati Financial

PICC Property

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PICC Property and are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PICC Property reported solid returns over the last few months and may actually be approaching a breakup point.

Cincinnati Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cincinnati Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with PICC Property and Cincinnati Financial

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

The idea behind PICC Property and and Cincinnati Financial 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.