Correlation Between Concepcion Industrial and National Reinsurance

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

By analyzing existing cross correlation between Concepcion Industrial Corp and National Reinsurance, you can compare the effects of market volatilities on Concepcion Industrial and National Reinsurance 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 Concepcion Industrial with a short position of National Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Concepcion Industrial and National Reinsurance.

Diversification Opportunities for Concepcion Industrial and National Reinsurance

0.35

Correlation Coefficient

Concepcion Industrial  National Reinsurance

Weak diversification

The 3 months correlation between Concepcion and National is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Concepcion Industrial Corp and National Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Reinsurance and Concepcion Industrial 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 Concepcion Industrial Corp are associated (or correlated) with National Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Reinsurance has no effect on the direction of Concepcion Industrial i.e., Concepcion Industrial and National Reinsurance go up and down completely randomly.

Pair Corralation between Concepcion Industrial and National Reinsurance

Assuming the 90 days trading horizon Concepcion Industrial is expected to generate 1.06 times less return on investment than National Reinsurance. But when comparing it to its historical volatility, Concepcion Industrial Corp is 1.43 times less risky than National Reinsurance. It trades about 0.13 of its potential returns per unit of risk. National Reinsurance is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  54.00  in National Reinsurance on April 21, 2025 and sell it today you would earn a total of  8.00  from holding National Reinsurance or generate 14.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Concepcion Industrial Corp  vs.  National Reinsurance

Concepcion Industrial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Concepcion Industrial Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Concepcion Industrial exhibited solid returns over the last few months and may actually be approaching a breakup point.

National Reinsurance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in National Reinsurance are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, National Reinsurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Concepcion Industrial and National Reinsurance

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

The idea behind Concepcion Industrial Corp and National 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.