Correlation Between Reinsurance Group and Singapore Reinsurance

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

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

Diversification Opportunities for Reinsurance Group and Singapore Reinsurance

0.79

Correlation Coefficient

Reinsurance Group  Singapore Reinsurance

Poor diversification

The 3 months correlation between Reinsurance and Singapore is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of and Singapore Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Reinsurance and Reinsurance Group 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 Reinsurance Group of 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 Reinsurance Group i.e., Reinsurance Group and Singapore Reinsurance go up and down completely randomly.

Pair Corralation between Reinsurance Group and Singapore Reinsurance

Assuming the 90 days trading horizon Reinsurance Group is expected to generate 4.41 times less return on investment than Singapore Reinsurance. But when comparing it to its historical volatility, Reinsurance Group of is 1.04 times less risky than Singapore Reinsurance. It trades about 0.04 of its potential returns per unit of risk. Singapore Reinsurance is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,800  in Singapore Reinsurance on September 14, 2024 and sell it today you would earn a total of  720.00  from holding Singapore Reinsurance or generate 25.71% return on investment over 90 days.

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

Reinsurance Group of  vs.  Singapore Reinsurance

Reinsurance Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Reinsurance Group of are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Reinsurance Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Singapore Reinsurance

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Singapore Reinsurance are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Singapore Reinsurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Reinsurance Group and Singapore Reinsurance

The main advantage of trading using opposite Reinsurance Group and Singapore Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reinsurance Group 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 Reinsurance Group of 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.

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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 Stocks Directory module to find actively traded stocks across global markets.