Correlation Between Safety Insurance and Singapore ReinsuranceLimit

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

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

Diversification Opportunities for Safety Insurance and Singapore ReinsuranceLimit

0.67

Correlation Coefficient

Safety Insurance  Singapore ReinsuranceLimit

Poor diversification

The 3 months correlation between Safety and Singapore is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Safety Insurance Group and Singapore Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore ReinsuranceLimit and Safety 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 Safety Insurance Group are associated (or correlated) with Singapore ReinsuranceLimit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore ReinsuranceLimit has no effect on the direction of Safety Insurance i.e., Safety Insurance and Singapore ReinsuranceLimit go up and down completely randomly.

Pair Corralation between Safety Insurance and Singapore ReinsuranceLimit

Assuming the 90 days horizon Safety Insurance Group is expected to under-perform the Singapore ReinsuranceLimit. But the stock apears to be less risky and, when comparing its historical volatility, Safety Insurance Group is 1.25 times less risky than Singapore ReinsuranceLimit. The stock trades about -0.11 of its potential returns per unit of risk. The Singapore Reinsurance is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  3,380  in Singapore Reinsurance on October 23, 2024 and sell it today you would earn a total of  220.00  from holding Singapore Reinsurance or generate 6.51% return on investment over 90 days.

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

Safety Insurance Group  vs.  Singapore Reinsurance

Safety Insurance

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Safety Insurance Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Safety Insurance may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Singapore ReinsuranceLimit

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Singapore Reinsurance are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Singapore ReinsuranceLimit unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Safety Insurance and Singapore ReinsuranceLimit

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

The idea behind Safety Insurance Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.