Correlation Between Insurance Australia and KOOL2PLAY
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and KOOL2PLAY 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 Insurance Australia and KOOL2PLAY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insurance Australia Group and KOOL2PLAY SA ZY, you can compare the effects of market volatilities on Insurance Australia and KOOL2PLAY 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 Insurance Australia with a short position of KOOL2PLAY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and KOOL2PLAY.
Diversification Opportunities for Insurance Australia and KOOL2PLAY
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Insurance and KOOL2PLAY is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and KOOL2PLAY SA ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KOOL2PLAY SA ZY and Insurance Australia 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 Insurance Australia Group are associated (or correlated) with KOOL2PLAY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KOOL2PLAY SA ZY has no effect on the direction of Insurance Australia i.e., Insurance Australia and KOOL2PLAY go up and down completely randomly.
Pair Corralation between Insurance Australia and KOOL2PLAY
Assuming the 90 days horizon Insurance Australia Group is expected to generate 0.35 times more return on investment than KOOL2PLAY. However, Insurance Australia Group is 2.86 times less risky than KOOL2PLAY. It trades about 0.22 of its potential returns per unit of risk. KOOL2PLAY SA ZY is currently generating about 0.03 per unit of risk. If you would invest 450.00 in Insurance Australia Group on August 29, 2024 and sell it today you would earn a total of 50.00 from holding Insurance Australia Group or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Insurance Australia Group vs. KOOL2PLAY SA ZY
Performance |
| Timeline |
| Insurance Australia |
| KOOL2PLAY SA ZY |
Insurance Australia and KOOL2PLAY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and KOOL2PLAY
The main advantage of trading using opposite Insurance Australia and KOOL2PLAY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, KOOL2PLAY 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 KOOL2PLAY will offset losses from the drop in KOOL2PLAY's long position.| Insurance Australia vs. PICC Property and | Insurance Australia vs. QBE Insurance Group | Insurance Australia vs. Superior Plus Corp | Insurance Australia vs. SIVERS SEMICONDUCTORS AB |
| KOOL2PLAY vs. Unity Software | KOOL2PLAY vs. Magic Software Enterprises | KOOL2PLAY vs. Tower Semiconductor | KOOL2PLAY vs. Alfa Financial Software |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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