Correlation Between Waterdrop ADR and International General

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

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

Diversification Opportunities for Waterdrop ADR and International General

0.0

Correlation Coefficient

Waterdrop ADR  International General

Pay attention - limited upside

The 3 months correlation between Waterdrop and International is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Waterdrop ADR and International General Insuranc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International General and Waterdrop ADR 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 Waterdrop ADR are associated (or correlated) with International General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International General has no effect on the direction of Waterdrop ADR i.e., Waterdrop ADR and International General go up and down completely randomly.

Pair Corralation between Waterdrop ADR and International General

If you would invest  113.00  in Waterdrop ADR on November 29, 2024 and sell it today you would earn a total of  14.00  from holding Waterdrop ADR or generate 12.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Waterdrop ADR  vs.  International General Insuranc

Waterdrop ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Waterdrop ADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal fundamental indicators, Waterdrop ADR demonstrated solid returns over the last few months and may actually be approaching a breakup point.

International General

Risk-Adjusted Performance

Very Weak

Over the last 90 days International General Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, International General is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Waterdrop ADR and International General

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

The idea behind Waterdrop ADR and International General Insurance 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.