Correlation Between AIICO INSURANCE and CHAMPION BREWERIES
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By analyzing existing cross correlation between AIICO INSURANCE PLC and CHAMPION BREWERIES PLC, you can compare the effects of market volatilities on AIICO INSURANCE and CHAMPION BREWERIES 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 AIICO INSURANCE with a short position of CHAMPION BREWERIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIICO INSURANCE and CHAMPION BREWERIES.
Diversification Opportunities for AIICO INSURANCE and CHAMPION BREWERIES
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AIICO and CHAMPION is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding AIICO INSURANCE PLC and CHAMPION BREWERIES PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHAMPION BREWERIES PLC and AIICO INSURANCE 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 AIICO INSURANCE PLC are associated (or correlated) with CHAMPION BREWERIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHAMPION BREWERIES PLC has no effect on the direction of AIICO INSURANCE i.e., AIICO INSURANCE and CHAMPION BREWERIES go up and down completely randomly.
Pair Corralation between AIICO INSURANCE and CHAMPION BREWERIES
Assuming the 90 days trading horizon AIICO INSURANCE PLC is expected to generate 0.89 times more return on investment than CHAMPION BREWERIES. However, AIICO INSURANCE PLC is 1.13 times less risky than CHAMPION BREWERIES. It trades about 0.07 of its potential returns per unit of risk. CHAMPION BREWERIES PLC is currently generating about 0.05 per unit of risk. If you would invest 75.00 in AIICO INSURANCE PLC on September 2, 2024 and sell it today you would earn a total of 45.00 from holding AIICO INSURANCE PLC or generate 60.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIICO INSURANCE PLC vs. CHAMPION BREWERIES PLC
Performance |
| Timeline |
| AIICO INSURANCE PLC |
| CHAMPION BREWERIES PLC |
AIICO INSURANCE and CHAMPION BREWERIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIICO INSURANCE and CHAMPION BREWERIES
The main advantage of trading using opposite AIICO INSURANCE and CHAMPION BREWERIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIICO INSURANCE position performs unexpectedly, CHAMPION BREWERIES 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 CHAMPION BREWERIES will offset losses from the drop in CHAMPION BREWERIES's long position.The idea behind AIICO INSURANCE PLC and CHAMPION BREWERIES PLC 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.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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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