Correlation Between Singapore Reinsurance and Arcosa

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

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

Diversification Opportunities for Singapore Reinsurance and Arcosa

0.86

Correlation Coefficient

Singapore Reinsurance  Arcosa

Very poor diversification

The 3 months correlation between Singapore and Arcosa is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Reinsurance and Arcosa Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcosa Inc 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 Arcosa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcosa Inc has no effect on the direction of Singapore Reinsurance i.e., Singapore Reinsurance and Arcosa go up and down completely randomly.

Pair Corralation between Singapore Reinsurance and Arcosa

Assuming the 90 days trading horizon Singapore Reinsurance is expected to generate 0.99 times more return on investment than Arcosa. However, Singapore Reinsurance is 1.01 times less risky than Arcosa. It trades about 0.12 of its potential returns per unit of risk. Arcosa Inc is currently generating about 0.0 per unit of risk. If you would invest  3,380  in Singapore Reinsurance on October 9, 2024 and sell it today you would earn a total of  240.00  from holding Singapore Reinsurance or generate 7.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.37%
Values	Daily Returns

Singapore Reinsurance  vs.  Arcosa Inc

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 fragile basic indicators, Singapore Reinsurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Arcosa Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arcosa Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Arcosa reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Singapore Reinsurance and Arcosa

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

The idea behind Singapore Reinsurance and Arcosa Inc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.