Correlation Between Major Drilling and INSURANCE AUST
Can any of the company-specific risk be diversified away by investing in both Major Drilling and INSURANCE AUST 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 Major Drilling and INSURANCE AUST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Major Drilling Group and INSURANCE AUST GRP, you can compare the effects of market volatilities on Major Drilling and INSURANCE AUST 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 Major Drilling with a short position of INSURANCE AUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and INSURANCE AUST.
Diversification Opportunities for Major Drilling and INSURANCE AUST
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Major and INSURANCE is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and INSURANCE AUST GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INSURANCE AUST GRP and Major Drilling 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 Major Drilling Group are associated (or correlated) with INSURANCE AUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INSURANCE AUST GRP has no effect on the direction of Major Drilling i.e., Major Drilling and INSURANCE AUST go up and down completely randomly.
Pair Corralation between Major Drilling and INSURANCE AUST
Assuming the 90 days horizon Major Drilling Group is expected to under-perform the INSURANCE AUST. In addition to that, Major Drilling is 1.44 times more volatile than INSURANCE AUST GRP. It trades about -0.02 of its total potential returns per unit of risk. INSURANCE AUST GRP is currently generating about 0.08 per unit of volatility. If you would invest 282.00 in INSURANCE AUST GRP on October 11, 2024 and sell it today you would earn a total of 223.00 from holding INSURANCE AUST GRP or generate 79.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Major Drilling Group vs. INSURANCE AUST GRP
Performance |
| Timeline |
| Major Drilling Group |
| INSURANCE AUST GRP |
Major Drilling and INSURANCE AUST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Drilling and INSURANCE AUST
The main advantage of trading using opposite Major Drilling and INSURANCE AUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling position performs unexpectedly, INSURANCE AUST 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 INSURANCE AUST will offset losses from the drop in INSURANCE AUST's long position.| Major Drilling vs. Zoom Video Communications | Major Drilling vs. MCEWEN MINING INC | Major Drilling vs. ARDAGH METAL PACDL 0001 | Major Drilling vs. Rocket Internet SE |
| INSURANCE AUST vs. ALLFUNDS GROUP EO 0025 | INSURANCE AUST vs. Major Drilling Group | INSURANCE AUST vs. Apollo Investment Corp | INSURANCE AUST vs. QINGCI GAMES INC |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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