Correlation Between QBE Insurance and Singapore Reinsurance

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

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

Diversification Opportunities for QBE Insurance and Singapore Reinsurance

-0.65

Correlation Coefficient

QBE Insurance  Singapore Reinsurance

Excellent diversification

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

Pair Corralation between QBE Insurance and Singapore Reinsurance

Assuming the 90 days horizon QBE Insurance Group is expected to generate 1.23 times more return on investment than Singapore Reinsurance. However, QBE Insurance is 1.23 times more volatile than Singapore Reinsurance. It trades about 0.1 of its potential returns per unit of risk. Singapore Reinsurance is currently generating about -0.02 per unit of risk. If you would invest  1,243  in QBE Insurance Group on December 30, 2024 and sell it today you would earn a total of  57.00  from holding QBE Insurance Group or generate 4.59% return on investment over 90 days.

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

QBE Insurance Group  vs.  Singapore Reinsurance

QBE Insurance Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in QBE Insurance Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, QBE Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

Singapore Reinsurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Singapore Reinsurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with QBE Insurance and Singapore Reinsurance

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

The idea behind QBE Insurance Group and Singapore Reinsurance 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.