Correlation Between FUYO GENERAL and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both FUYO GENERAL and Insurance Australia 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 FUYO GENERAL and Insurance Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FUYO GENERAL LEASE and Insurance Australia Group, you can compare the effects of market volatilities on FUYO GENERAL and Insurance Australia 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 FUYO GENERAL with a short position of Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of FUYO GENERAL and Insurance Australia.
Diversification Opportunities for FUYO GENERAL and Insurance Australia
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FUYO and Insurance is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding FUYO GENERAL LEASE and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia and FUYO GENERAL 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 FUYO GENERAL LEASE are associated (or correlated) with Insurance Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insurance Australia has no effect on the direction of FUYO GENERAL i.e., FUYO GENERAL and Insurance Australia go up and down completely randomly.
Pair Corralation between FUYO GENERAL and Insurance Australia
Assuming the 90 days horizon FUYO GENERAL is expected to generate 2.88 times less return on investment than Insurance Australia. But when comparing it to its historical volatility, FUYO GENERAL LEASE is 1.68 times less risky than Insurance Australia. It trades about 0.08 of its potential returns per unit of risk. Insurance Australia Group is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 474.00 in Insurance Australia Group on September 13, 2024 and sell it today you would earn a total of 31.00 from holding Insurance Australia Group or generate 6.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FUYO GENERAL LEASE vs. Insurance Australia Group
Performance |
| Timeline |
| FUYO GENERAL LEASE |
| Insurance Australia |
FUYO GENERAL and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FUYO GENERAL and Insurance Australia
The main advantage of trading using opposite FUYO GENERAL and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FUYO GENERAL position performs unexpectedly, Insurance Australia 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 Australia will offset losses from the drop in Insurance Australia's long position.| FUYO GENERAL vs. United Rentals | FUYO GENERAL vs. WillScot Mobile Mini | FUYO GENERAL vs. Superior Plus Corp | FUYO GENERAL vs. SIVERS SEMICONDUCTORS AB |
| Insurance Australia vs. QBE Insurance Group | Insurance Australia vs. Superior Plus Corp | Insurance Australia vs. SIVERS SEMICONDUCTORS AB | Insurance Australia vs. CHINA HUARONG ENERHD 50 |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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