Correlation Between Atlantic American and AIA Group
Can any of the company-specific risk be diversified away by investing in both Atlantic American and AIA Group 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 Atlantic American and AIA Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atlantic American and AIA Group Ltd, you can compare the effects of market volatilities on Atlantic American and AIA Group 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 Atlantic American with a short position of AIA Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlantic American and AIA Group.
Diversification Opportunities for Atlantic American and AIA Group
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Atlantic and AIA is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Atlantic American and AIA Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIA Group and Atlantic American 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 Atlantic American are associated (or correlated) with AIA Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIA Group has no effect on the direction of Atlantic American i.e., Atlantic American and AIA Group go up and down completely randomly.
Pair Corralation between Atlantic American and AIA Group
Given the investment horizon of 90 days Atlantic American is expected to under-perform the AIA Group. In addition to that, Atlantic American is 2.0 times more volatile than AIA Group Ltd. It trades about -0.07 of its total potential returns per unit of risk. AIA Group Ltd is currently generating about -0.14 per unit of volatility. If you would invest 3,160 in AIA Group Ltd on October 22, 2024 and sell it today you would lose (337.00) from holding AIA Group Ltd or give up 10.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atlantic American vs. AIA Group Ltd
Performance |
| Timeline |
| Atlantic American |
| AIA Group |
Atlantic American and AIA Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlantic American and AIA Group
The main advantage of trading using opposite Atlantic American and AIA Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlantic American position performs unexpectedly, AIA Group 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 AIA Group will offset losses from the drop in AIA Group's long position.| Atlantic American vs. CNO Financial Group | Atlantic American vs. MetLife Preferred Stock | Atlantic American vs. FG Annuities Life | Atlantic American vs. Prudential PLC ADR |
| AIA Group vs. Atlantic American | AIA Group vs. Ping An Insurance | AIA Group vs. China Life Insurance | AIA Group vs. Sanlam Ltd PK |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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