Correlation Between De Grey and INSURANCE AUST
Can any of the company-specific risk be diversified away by investing in both De Grey 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 De Grey and INSURANCE AUST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between De Grey Mining and INSURANCE AUST GRP, you can compare the effects of market volatilities on De Grey 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 De Grey with a short position of INSURANCE AUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Grey and INSURANCE AUST.
Diversification Opportunities for De Grey and INSURANCE AUST
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DGD and INSURANCE is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding De Grey Mining 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 De Grey 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 De Grey Mining 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 De Grey i.e., De Grey and INSURANCE AUST go up and down completely randomly.
Pair Corralation between De Grey and INSURANCE AUST
Assuming the 90 days trading horizon De Grey Mining is expected to generate 1.51 times more return on investment than INSURANCE AUST. However, De Grey is 1.51 times more volatile than INSURANCE AUST GRP. It trades about 0.32 of its potential returns per unit of risk. INSURANCE AUST GRP is currently generating about 0.3 per unit of risk. If you would invest 104.00 in De Grey Mining on November 3, 2024 and sell it today you would earn a total of 15.00 from holding De Grey Mining or generate 14.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
De Grey Mining vs. INSURANCE AUST GRP
Performance |
| Timeline |
| De Grey Mining |
| INSURANCE AUST GRP |
De Grey and INSURANCE AUST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with De Grey and INSURANCE AUST
The main advantage of trading using opposite De Grey and INSURANCE AUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if De Grey 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.| De Grey vs. Citic Telecom International | De Grey vs. Verizon Communications | De Grey vs. Telecom Argentina SA | De Grey vs. Summit Hotel Properties |
| INSURANCE AUST vs. Nucletron Electronic Aktiengesellschaft | INSURANCE AUST vs. Meiko Electronics Co | INSURANCE AUST vs. Universal Entertainment | INSURANCE AUST vs. GigaMedia |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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