Correlation Between Great West and AIA Group
Can any of the company-specific risk be diversified away by investing in both Great West and AIA 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 Great West and AIA Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great West Lifeco and AIA Group Limited, you can compare the effects of market volatilities on Great West and AIA 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 Great West with a short position of AIA Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and AIA Group.
Diversification Opportunities for Great West and AIA Group
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Great and AIA is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Great West Lifeco and AIA Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIA Group Limited and Great West 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 Great West Lifeco are associated (or correlated) with AIA Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIA Group Limited has no effect on the direction of Great West i.e., Great West and AIA Group go up and down completely randomly.
Pair Corralation between Great West and AIA Group
Assuming the 90 days horizon Great West Lifeco is expected to under-perform the AIA Group. But the stock apears to be less risky and, when comparing its historical volatility, Great West Lifeco is 1.79 times less risky than AIA Group. The stock trades about -0.15 of its potential returns per unit of risk. The AIA Group Limited is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 676.00 in AIA Group Limited on November 2, 2024 and sell it today you would lose (10.00) from holding AIA Group Limited or give up 1.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Great West Lifeco vs. AIA Group Limited
Performance |
| Timeline |
| Great West Lifeco |
| AIA Group Limited |
Great West and AIA Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great West and AIA Group
The main advantage of trading using opposite Great West and AIA Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great West position performs unexpectedly, AIA 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 AIA Group will offset losses from the drop in AIA Group's long position.| Great West vs. Ping An Insurance | Great West vs. AIA Group Limited | Great West vs. China Life Insurance | Great West vs. MetLife |
| AIA Group vs. Ping An Insurance | AIA Group vs. China Life Insurance | AIA Group vs. MetLife | AIA Group vs. Prudential plc |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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