Correlation Between QBE Insurance and Pharol SGPS

Can any of the company-specific risk be diversified away by investing in both QBE Insurance and Pharol SGPS 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 Pharol SGPS 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 Pharol SGPS SA, you can compare the effects of market volatilities on QBE Insurance and Pharol SGPS 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 Pharol SGPS. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and Pharol SGPS.

Diversification Opportunities for QBE Insurance and Pharol SGPS

-0.33

Correlation Coefficient

QBE Insurance  Pharol SGPS

Very good diversification

The 3 months correlation between QBE and Pharol is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and Pharol SGPS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharol SGPS SA 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 Pharol SGPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharol SGPS SA has no effect on the direction of QBE Insurance i.e., QBE Insurance and Pharol SGPS go up and down completely randomly.

Pair Corralation between QBE Insurance and Pharol SGPS

If you would invest  3.00  in Pharol SGPS SA on October 20, 2024 and sell it today you would earn a total of  1.00  from holding Pharol SGPS SA or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	86.36%
Values	Daily Returns

QBE Insurance Group  vs.  Pharol SGPS SA

QBE Insurance Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in QBE Insurance Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, QBE Insurance may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pharol SGPS SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pharol SGPS SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Pharol SGPS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with QBE Insurance and Pharol SGPS

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

The idea behind QBE Insurance Group and Pharol SGPS SA 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.