Correlation Between AUST AGRICULTURAL and Reinsurance Group
Can any of the company-specific risk be diversified away by investing in both AUST AGRICULTURAL and Reinsurance 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 AUST AGRICULTURAL and Reinsurance Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AUST AGRICULTURAL and Reinsurance Group of, you can compare the effects of market volatilities on AUST AGRICULTURAL and Reinsurance 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 AUST AGRICULTURAL with a short position of Reinsurance Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of AUST AGRICULTURAL and Reinsurance Group.
Diversification Opportunities for AUST AGRICULTURAL and Reinsurance Group
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AUST and Reinsurance is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding AUST AGRICULTURAL and Reinsurance Group of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reinsurance Group and AUST AGRICULTURAL 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 AUST AGRICULTURAL are associated (or correlated) with Reinsurance Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reinsurance Group has no effect on the direction of AUST AGRICULTURAL i.e., AUST AGRICULTURAL and Reinsurance Group go up and down completely randomly.
Pair Corralation between AUST AGRICULTURAL and Reinsurance Group
Assuming the 90 days trading horizon AUST AGRICULTURAL is expected to generate 0.58 times more return on investment than Reinsurance Group. However, AUST AGRICULTURAL is 1.72 times less risky than Reinsurance Group. It trades about -0.21 of its potential returns per unit of risk. Reinsurance Group of is currently generating about -0.39 per unit of risk. If you would invest 85.00 in AUST AGRICULTURAL on September 22, 2024 and sell it today you would lose (3.00) from holding AUST AGRICULTURAL or give up 3.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AUST AGRICULTURAL vs. Reinsurance Group of
Performance |
| Timeline |
| AUST AGRICULTURAL |
| Reinsurance Group |
AUST AGRICULTURAL and Reinsurance Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AUST AGRICULTURAL and Reinsurance Group
The main advantage of trading using opposite AUST AGRICULTURAL and Reinsurance Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AUST AGRICULTURAL position performs unexpectedly, Reinsurance 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 Reinsurance Group will offset losses from the drop in Reinsurance Group's long position.| AUST AGRICULTURAL vs. Apple Inc | AUST AGRICULTURAL vs. Apple Inc | AUST AGRICULTURAL vs. Apple Inc | AUST AGRICULTURAL vs. Apple Inc |
| Reinsurance Group vs. AUST AGRICULTURAL | Reinsurance Group vs. Hanison Construction Holdings | Reinsurance Group vs. North American Construction | Reinsurance Group vs. GREENX METALS LTD |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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