Correlation Between KENEDIX OFFICE and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both KENEDIX OFFICE 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 KENEDIX OFFICE and Insurance Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KENEDIX OFFICE INV and Insurance Australia Group, you can compare the effects of market volatilities on KENEDIX OFFICE 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 KENEDIX OFFICE with a short position of Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENEDIX OFFICE and Insurance Australia.
Diversification Opportunities for KENEDIX OFFICE and Insurance Australia
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KENEDIX and Insurance is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding KENEDIX OFFICE INV and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia and KENEDIX OFFICE 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 KENEDIX OFFICE INV 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 KENEDIX OFFICE i.e., KENEDIX OFFICE and Insurance Australia go up and down completely randomly.
Pair Corralation between KENEDIX OFFICE and Insurance Australia
Assuming the 90 days horizon KENEDIX OFFICE is expected to generate 2.02 times less return on investment than Insurance Australia. In addition to that, KENEDIX OFFICE is 1.0 times more volatile than Insurance Australia Group. It trades about 0.12 of its total potential returns per unit of risk. Insurance Australia Group is currently generating about 0.25 per unit of volatility. If you would invest 505.00 in Insurance Australia Group on November 6, 2024 and sell it today you would earn a total of 35.00 from holding Insurance Australia Group or generate 6.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KENEDIX OFFICE INV vs. Insurance Australia Group
Performance |
| Timeline |
| KENEDIX OFFICE INV |
| Insurance Australia |
KENEDIX OFFICE and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KENEDIX OFFICE and Insurance Australia
The main advantage of trading using opposite KENEDIX OFFICE and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KENEDIX OFFICE 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.| KENEDIX OFFICE vs. American Eagle Outfitters | KENEDIX OFFICE vs. Kingdee International Software | KENEDIX OFFICE vs. CHINA TONTINE WINES | KENEDIX OFFICE vs. Unity Software |
| Insurance Australia vs. Fortescue Metals Group | Insurance Australia vs. SBM OFFSHORE | Insurance Australia vs. Jacquet Metal Service | Insurance Australia vs. Transport International Holdings |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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