Correlation Between CHINA OIL and INSURANCE AUST
Can any of the company-specific risk be diversified away by investing in both CHINA OIL 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 CHINA OIL and INSURANCE AUST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA OIL AND and INSURANCE AUST GRP, you can compare the effects of market volatilities on CHINA OIL 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 CHINA OIL with a short position of INSURANCE AUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA OIL and INSURANCE AUST.
Diversification Opportunities for CHINA OIL and INSURANCE AUST
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CHINA and INSURANCE is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding CHINA OIL AND 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 CHINA OIL 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 CHINA OIL AND 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 CHINA OIL i.e., CHINA OIL and INSURANCE AUST go up and down completely randomly.
Pair Corralation between CHINA OIL and INSURANCE AUST
Assuming the 90 days trading horizon CHINA OIL AND is expected to under-perform the INSURANCE AUST. But the stock apears to be less risky and, when comparing its historical volatility, CHINA OIL AND is 1.77 times less risky than INSURANCE AUST. The stock trades about -0.04 of its potential returns per unit of risk. The INSURANCE AUST GRP is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 315.00 in INSURANCE AUST GRP on September 12, 2024 and sell it today you would earn a total of 185.00 from holding INSURANCE AUST GRP or generate 58.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA OIL AND vs. INSURANCE AUST GRP
Performance |
| Timeline |
| CHINA OIL AND |
| INSURANCE AUST GRP |
CHINA OIL and INSURANCE AUST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA OIL and INSURANCE AUST
The main advantage of trading using opposite CHINA OIL and INSURANCE AUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA OIL 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.| CHINA OIL vs. American Public Education | CHINA OIL vs. AEON STORES | CHINA OIL vs. G8 EDUCATION | CHINA OIL vs. MARKET VECTR RETAIL |
| INSURANCE AUST vs. Apple Inc | INSURANCE AUST vs. Apple Inc | INSURANCE AUST vs. Apple Inc | INSURANCE AUST vs. Apple Inc |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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