Correlation Between Singapore Reinsurance and ArcBest

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

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

Diversification Opportunities for Singapore Reinsurance and ArcBest

0.61

Correlation Coefficient

Singapore Reinsurance  ArcBest

Poor diversification

The 3 months correlation between Singapore and ArcBest is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Reinsurance and ArcBest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcBest and Singapore 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 Singapore Reinsurance are associated (or correlated) with ArcBest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcBest has no effect on the direction of Singapore Reinsurance i.e., Singapore Reinsurance and ArcBest go up and down completely randomly.

Pair Corralation between Singapore Reinsurance and ArcBest

Assuming the 90 days trading horizon Singapore Reinsurance is expected to generate 0.65 times more return on investment than ArcBest. However, Singapore Reinsurance is 1.53 times less risky than ArcBest. It trades about -0.07 of its potential returns per unit of risk. ArcBest is currently generating about -0.57 per unit of risk. If you would invest  3,560  in Singapore Reinsurance on October 3, 2024 and sell it today you would lose (60.00) from holding Singapore Reinsurance or give up 1.69% of portfolio value over 90 days.

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

Singapore Reinsurance  vs.  ArcBest

Singapore Reinsurance

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Singapore Reinsurance are ranked lower than 12 (%) 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.

ArcBest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ArcBest has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ArcBest is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Singapore Reinsurance and ArcBest

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

The idea behind Singapore Reinsurance and ArcBest 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.