Correlation Between PVI Reinsurance and Din Capital

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

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

Diversification Opportunities for PVI Reinsurance and Din Capital

-0.39

Correlation Coefficient

PVI Reinsurance  Din Capital

Very good diversification

The 3 months correlation between PVI and Din is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding PVI Reinsurance Corp and Din Capital Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Din Capital Investment and PVI Reinsurance 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 PVI Reinsurance Corp are associated (or correlated) with Din Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Din Capital Investment has no effect on the direction of PVI Reinsurance i.e., PVI Reinsurance and Din Capital go up and down completely randomly.

Pair Corralation between PVI Reinsurance and Din Capital

Assuming the 90 days trading horizon PVI Reinsurance Corp is expected to generate 1.74 times more return on investment than Din Capital. However, PVI Reinsurance is 1.74 times more volatile than Din Capital Investment. It trades about 0.03 of its potential returns per unit of risk. Din Capital Investment is currently generating about -0.01 per unit of risk. If you would invest  1,980,000  in PVI Reinsurance Corp on December 19, 2024 and sell it today you would earn a total of  50,000  from holding PVI Reinsurance Corp or generate 2.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

PVI Reinsurance Corp  vs.  Din Capital Investment

PVI Reinsurance Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PVI Reinsurance Corp are ranked lower than 2 (%) 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.

Din Capital Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Din Capital Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, Din Capital is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with PVI Reinsurance and Din Capital

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

The idea behind PVI Reinsurance Corp and Din Capital Investment 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..