Correlation Between Singapore ReinsuranceLimit and CDN IMPERIAL

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

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

Diversification Opportunities for Singapore ReinsuranceLimit and CDN IMPERIAL

0.8

Correlation Coefficient

Singapore ReinsuranceLimit  CDN IMPERIAL

Very poor diversification

The 3 months correlation between Singapore and CDN is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Reinsurance and CDN IMPERIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDN IMPERIAL BANK and Singapore ReinsuranceLimit 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 CDN IMPERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDN IMPERIAL BANK has no effect on the direction of Singapore ReinsuranceLimit i.e., Singapore ReinsuranceLimit and CDN IMPERIAL go up and down completely randomly.

Pair Corralation between Singapore ReinsuranceLimit and CDN IMPERIAL

Assuming the 90 days trading horizon Singapore Reinsurance is expected to generate 2.11 times more return on investment than CDN IMPERIAL. However, Singapore ReinsuranceLimit is 2.11 times more volatile than CDN IMPERIAL BANK. It trades about 0.14 of its potential returns per unit of risk. CDN IMPERIAL BANK is currently generating about 0.1 per unit of risk. If you would invest  3,100  in Singapore Reinsurance on October 24, 2024 and sell it today you would earn a total of  580.00  from holding Singapore Reinsurance or generate 18.71% return on investment over 90 days.

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

Singapore Reinsurance  vs.  CDN IMPERIAL BANK

Singapore ReinsuranceLimit

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Singapore Reinsurance are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Singapore ReinsuranceLimit unveiled solid returns over the last few months and may actually be approaching a breakup point.

CDN IMPERIAL BANK

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CDN IMPERIAL BANK are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, CDN IMPERIAL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Singapore ReinsuranceLimit and CDN IMPERIAL

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

The idea behind Singapore Reinsurance and CDN IMPERIAL BANK 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.