Correlation Between Vienna Insurance and Singapore ReinsuranceLimit

Can any of the company-specific risk be diversified away by investing in both Vienna 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 Vienna 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 Vienna Insurance Group and Singapore Reinsurance, you can compare the effects of market volatilities on Vienna 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 Vienna Insurance with a short position of Singapore ReinsuranceLimit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vienna Insurance and Singapore ReinsuranceLimit.

Diversification Opportunities for Vienna Insurance and Singapore ReinsuranceLimit

-0.26

Correlation Coefficient

Vienna Insurance  Singapore ReinsuranceLimit

Very good diversification

The 3 months correlation between Vienna and Singapore is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Vienna 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 Vienna 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 Vienna 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 Vienna Insurance i.e., Vienna Insurance and Singapore ReinsuranceLimit go up and down completely randomly.

Pair Corralation between Vienna Insurance and Singapore ReinsuranceLimit

Assuming the 90 days trading horizon Vienna Insurance is expected to generate 5.21 times less return on investment than Singapore ReinsuranceLimit. But when comparing it to its historical volatility, Vienna Insurance Group is 2.1 times less risky than Singapore ReinsuranceLimit. It trades about 0.06 of its potential returns per unit of risk. Singapore Reinsurance is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,880  in Singapore Reinsurance on October 5, 2024 and sell it today you would earn a total of  620.00  from holding Singapore Reinsurance or generate 21.53% return on investment over 90 days.

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

Vienna Insurance Group  vs.  Singapore Reinsurance

Vienna Insurance

Risk-Adjusted Performance

0 of 100

Modest

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

Singapore ReinsuranceLimit

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Singapore Reinsurance has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Vienna Insurance and Singapore ReinsuranceLimit

The main advantage of trading using opposite Vienna Insurance and Singapore ReinsuranceLimit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vienna 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 Vienna 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.