Correlation Between WuXi AppTec and Safety Insurance
Can any of the company-specific risk be diversified away by investing in both WuXi AppTec and Safety Insurance 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 WuXi AppTec and Safety Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WuXi AppTec Co and Safety Insurance Group, you can compare the effects of market volatilities on WuXi AppTec and Safety Insurance 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 WuXi AppTec with a short position of Safety Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of WuXi AppTec and Safety Insurance.
Diversification Opportunities for WuXi AppTec and Safety Insurance
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between WuXi and Safety is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding WuXi AppTec Co and Safety Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Insurance and WuXi AppTec 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 WuXi AppTec Co are associated (or correlated) with Safety Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Insurance has no effect on the direction of WuXi AppTec i.e., WuXi AppTec and Safety Insurance go up and down completely randomly.
Pair Corralation between WuXi AppTec and Safety Insurance
Assuming the 90 days horizon WuXi AppTec Co is expected to generate 2.4 times more return on investment than Safety Insurance. However, WuXi AppTec is 2.4 times more volatile than Safety Insurance Group. It trades about 0.09 of its potential returns per unit of risk. Safety Insurance Group is currently generating about -0.05 per unit of risk. If you would invest 685.00 in WuXi AppTec Co on December 28, 2024 and sell it today you would earn a total of 130.00 from holding WuXi AppTec Co or generate 18.98% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
WuXi AppTec Co vs. Safety Insurance Group
Performance |
Timeline |
WuXi AppTec |
Safety Insurance |
WuXi AppTec and Safety Insurance Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with WuXi AppTec and Safety Insurance
The main advantage of trading using opposite WuXi AppTec and Safety Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WuXi AppTec position performs unexpectedly, Safety Insurance 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 Safety Insurance will offset losses from the drop in Safety Insurance's long position.WuXi AppTec vs. Zurich Insurance Group | WuXi AppTec vs. Hanison Construction Holdings | WuXi AppTec vs. Universal Insurance Holdings | WuXi AppTec vs. The Hanover Insurance |
Safety Insurance vs. Strategic Education | Safety Insurance vs. Xinhua Winshare Publishing | Safety Insurance vs. BE Semiconductor Industries | Safety Insurance vs. Commercial Vehicle Group |
Check out your portfolio center.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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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