Correlation Between Insurance Australia and Addtech AB
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and Addtech AB 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 Addtech AB 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 Addtech AB, you can compare the effects of market volatilities on Insurance Australia and Addtech AB 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 Addtech AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and Addtech AB.
Diversification Opportunities for Insurance Australia and Addtech AB
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Insurance and Addtech is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and Addtech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addtech AB 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 Addtech AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addtech AB has no effect on the direction of Insurance Australia i.e., Insurance Australia and Addtech AB go up and down completely randomly.
Pair Corralation between Insurance Australia and Addtech AB
Assuming the 90 days horizon Insurance Australia is expected to generate 1.08 times less return on investment than Addtech AB. But when comparing it to its historical volatility, Insurance Australia Group is 1.26 times less risky than Addtech AB. It trades about 0.11 of its potential returns per unit of risk. Addtech AB is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,758 in Addtech AB on November 3, 2024 and sell it today you would earn a total of 1,000.00 from holding Addtech AB or generate 56.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insurance Australia Group vs. Addtech AB
Performance |
| Timeline |
| Insurance Australia |
| Addtech AB |
Insurance Australia and Addtech AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and Addtech AB
The main advantage of trading using opposite Insurance Australia and Addtech AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, Addtech AB 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 Addtech AB will offset losses from the drop in Addtech AB's long position.| Insurance Australia vs. United Utilities Group | Insurance Australia vs. Sekisui Chemical Co | Insurance Australia vs. X FAB Silicon Foundries | Insurance Australia vs. China BlueChemical |
| Addtech AB vs. Monster Beverage Corp | Addtech AB vs. Molson Coors Beverage | Addtech AB vs. Shin Etsu Chemical Co | Addtech AB vs. X FAB Silicon Foundries |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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