Correlation Between PVI Reinsurance and Construction JSC

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

By analyzing existing cross correlation between PVI Reinsurance Corp and Construction JSC No5, you can compare the effects of market volatilities on PVI Reinsurance and Construction JSC 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 PVI Reinsurance with a short position of Construction JSC. Check out your portfolio center. Please also check ongoing floating volatility patterns of PVI Reinsurance and Construction JSC.

Diversification Opportunities for PVI Reinsurance and Construction JSC

-0.35

Correlation Coefficient

PVI Reinsurance  Construction JSC

Very good diversification

The 3 months correlation between PVI and Construction is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding PVI Reinsurance Corp and Construction JSC No5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Construction JSC No5 and PVI 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 PVI Reinsurance Corp are associated (or correlated) with Construction JSC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Construction JSC No5 has no effect on the direction of PVI Reinsurance i.e., PVI Reinsurance and Construction JSC go up and down completely randomly.

Pair Corralation between PVI Reinsurance and Construction JSC

Assuming the 90 days trading horizon PVI Reinsurance Corp is expected to generate 0.61 times more return on investment than Construction JSC. However, PVI Reinsurance Corp is 1.64 times less risky than Construction JSC. It trades about -0.01 of its potential returns per unit of risk. Construction JSC No5 is currently generating about -0.02 per unit of risk. If you would invest  1,990,000  in PVI Reinsurance Corp on May 6, 2025 and sell it today you would lose (40,000) from holding PVI Reinsurance Corp or give up 2.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.52%
Values	Daily Returns

PVI Reinsurance Corp  vs.  Construction JSC No5

PVI Reinsurance Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days PVI Reinsurance Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, PVI Reinsurance is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Construction JSC No5

Risk-Adjusted Performance

Very Weak

Over the last 90 days Construction JSC No5 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Construction JSC is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with PVI Reinsurance and Construction JSC

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

The idea behind PVI Reinsurance Corp and Construction JSC No5 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.