Correlation Between National Reinsurance and Cirtek Holdings

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

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

Diversification Opportunities for National Reinsurance and Cirtek Holdings

-0.67

Correlation Coefficient

National Reinsurance  Cirtek Holdings

Excellent diversification

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

Pair Corralation between National Reinsurance and Cirtek Holdings

Assuming the 90 days trading horizon National Reinsurance is expected to generate 20.52 times less return on investment than Cirtek Holdings. But when comparing it to its historical volatility, National Reinsurance is 6.18 times less risky than Cirtek Holdings. It trades about 0.1 of its potential returns per unit of risk. Cirtek Holdings Philippines is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  3.73  in Cirtek Holdings Philippines on April 23, 2025 and sell it today you would earn a total of  4.27  from holding Cirtek Holdings Philippines or generate 114.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	32.2%
Values	Daily Returns

National Reinsurance  vs.  Cirtek Holdings Philippines

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 uncertain basic indicators, National Reinsurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Cirtek Holdings Phil

Risk-Adjusted Performance

Solid

Over the last 90 days Cirtek Holdings Philippines has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak fundamental drivers, Cirtek Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Reinsurance and Cirtek Holdings

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

The idea behind National Reinsurance and Cirtek Holdings Philippines 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .