Correlation Between Transport International and INSURANCE AUST
Can any of the company-specific risk be diversified away by investing in both Transport International 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 Transport International and INSURANCE AUST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transport International Holdings and INSURANCE AUST GRP, you can compare the effects of market volatilities on Transport International 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 Transport International with a short position of INSURANCE AUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transport International and INSURANCE AUST.
Diversification Opportunities for Transport International and INSURANCE AUST
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Transport and INSURANCE is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Transport International Holdin 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 Transport International 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 Transport International Holdings 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 Transport International i.e., Transport International and INSURANCE AUST go up and down completely randomly.
Pair Corralation between Transport International and INSURANCE AUST
Assuming the 90 days horizon Transport International Holdings is expected to generate 3.47 times more return on investment than INSURANCE AUST. However, Transport International is 3.47 times more volatile than INSURANCE AUST GRP. It trades about 0.06 of its potential returns per unit of risk. INSURANCE AUST GRP is currently generating about 0.13 per unit of risk. If you would invest 56.00 in Transport International Holdings on August 25, 2024 and sell it today you would earn a total of 39.00 from holding Transport International Holdings or generate 69.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transport International Holdin vs. INSURANCE AUST GRP
Performance |
| Timeline |
| Transport International |
| INSURANCE AUST GRP |
Transport International and INSURANCE AUST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transport International and INSURANCE AUST
The main advantage of trading using opposite Transport International and INSURANCE AUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transport International 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.| Transport International vs. CRRC Limited | Transport International vs. Westinghouse Air Brake | Transport International vs. Superior Plus Corp | Transport International vs. NMI Holdings |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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