Correlation Between RETAIL FOOD and INSURANCE AUST
Can any of the company-specific risk be diversified away by investing in both RETAIL FOOD 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 RETAIL FOOD and INSURANCE AUST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RETAIL FOOD GROUP and INSURANCE AUST GRP, you can compare the effects of market volatilities on RETAIL FOOD 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 RETAIL FOOD with a short position of INSURANCE AUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of RETAIL FOOD and INSURANCE AUST.
Diversification Opportunities for RETAIL FOOD and INSURANCE AUST
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between RETAIL and INSURANCE is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding RETAIL FOOD GROUP 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 RETAIL FOOD 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 RETAIL FOOD GROUP 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 RETAIL FOOD i.e., RETAIL FOOD and INSURANCE AUST go up and down completely randomly.
Pair Corralation between RETAIL FOOD and INSURANCE AUST
Assuming the 90 days trading horizon RETAIL FOOD is expected to generate 1.79 times less return on investment than INSURANCE AUST. In addition to that, RETAIL FOOD is 1.96 times more volatile than INSURANCE AUST GRP. It trades about 0.03 of its total potential returns per unit of risk. INSURANCE AUST GRP is currently generating about 0.09 per unit of volatility. If you would invest 304.00 in INSURANCE AUST GRP on October 16, 2024 and sell it today you would earn a total of 196.00 from holding INSURANCE AUST GRP or generate 64.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RETAIL FOOD GROUP vs. INSURANCE AUST GRP
Performance |
| Timeline |
| RETAIL FOOD GROUP |
| INSURANCE AUST GRP |
RETAIL FOOD and INSURANCE AUST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RETAIL FOOD and INSURANCE AUST
The main advantage of trading using opposite RETAIL FOOD and INSURANCE AUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RETAIL FOOD 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.| RETAIL FOOD vs. Silicon Motion Technology | RETAIL FOOD vs. Soken Chemical Engineering | RETAIL FOOD vs. Sekisui Chemical Co | RETAIL FOOD vs. Quaker Chemical |
| INSURANCE AUST vs. H2O Retailing | INSURANCE AUST vs. RETAIL FOOD GROUP | INSURANCE AUST vs. Chuangs China Investments | INSURANCE AUST vs. SEI INVESTMENTS |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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