Correlation Between REVO INSURANCE and AJ LUCAS
Can any of the company-specific risk be diversified away by investing in both REVO INSURANCE and AJ LUCAS 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 REVO INSURANCE and AJ LUCAS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REVO INSURANCE SPA and AJ LUCAS GROUP, you can compare the effects of market volatilities on REVO INSURANCE and AJ LUCAS 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 REVO INSURANCE with a short position of AJ LUCAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of REVO INSURANCE and AJ LUCAS.
Diversification Opportunities for REVO INSURANCE and AJ LUCAS
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between REVO and FW9 is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding REVO INSURANCE SPA and AJ LUCAS GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AJ LUCAS GROUP and REVO INSURANCE 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 REVO INSURANCE SPA are associated (or correlated) with AJ LUCAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AJ LUCAS GROUP has no effect on the direction of REVO INSURANCE i.e., REVO INSURANCE and AJ LUCAS go up and down completely randomly.
Pair Corralation between REVO INSURANCE and AJ LUCAS
Assuming the 90 days horizon REVO INSURANCE is expected to generate 12.08 times less return on investment than AJ LUCAS. But when comparing it to its historical volatility, REVO INSURANCE SPA is 18.24 times less risky than AJ LUCAS. It trades about 0.12 of its potential returns per unit of risk. AJ LUCAS GROUP is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 0.25 in AJ LUCAS GROUP on September 4, 2024 and sell it today you would lose (0.15) from holding AJ LUCAS GROUP or give up 60.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
REVO INSURANCE SPA vs. AJ LUCAS GROUP
Performance |
| Timeline |
| REVO INSURANCE SPA |
| AJ LUCAS GROUP |
REVO INSURANCE and AJ LUCAS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REVO INSURANCE and AJ LUCAS
The main advantage of trading using opposite REVO INSURANCE and AJ LUCAS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REVO INSURANCE position performs unexpectedly, AJ LUCAS 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 AJ LUCAS will offset losses from the drop in AJ LUCAS's long position.| REVO INSURANCE vs. Alfa Financial Software | REVO INSURANCE vs. AXWAY SOFTWARE EO | REVO INSURANCE vs. National Beverage Corp | REVO INSURANCE vs. ETFS Coffee ETC |
| AJ LUCAS vs. Insurance Australia Group | AJ LUCAS vs. Games Workshop Group | AJ LUCAS vs. Scientific Games | AJ LUCAS vs. REVO INSURANCE SPA |
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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