Correlation Between Insurance Australia and Karoon Energy
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and Karoon Energy 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 Karoon Energy 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 Karoon Energy, you can compare the effects of market volatilities on Insurance Australia and Karoon Energy 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 Karoon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and Karoon Energy.
Diversification Opportunities for Insurance Australia and Karoon Energy
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Insurance and Karoon is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and Karoon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karoon Energy 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 Karoon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karoon Energy has no effect on the direction of Insurance Australia i.e., Insurance Australia and Karoon Energy go up and down completely randomly.
Pair Corralation between Insurance Australia and Karoon Energy
Assuming the 90 days horizon Insurance Australia Group is expected to generate 0.65 times more return on investment than Karoon Energy. However, Insurance Australia Group is 1.54 times less risky than Karoon Energy. It trades about 0.11 of its potential returns per unit of risk. Karoon Energy is currently generating about -0.03 per unit of risk. If you would invest 316.00 in Insurance Australia Group on September 14, 2024 and sell it today you would earn a total of 180.00 from holding Insurance Australia Group or generate 56.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Insurance Australia Group vs. Karoon Energy
Performance |
| Timeline |
| Insurance Australia |
| Karoon Energy |
Insurance Australia and Karoon Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and Karoon Energy
The main advantage of trading using opposite Insurance Australia and Karoon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, Karoon Energy 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 Karoon Energy will offset losses from the drop in Karoon Energy's long position.| Insurance Australia vs. Superior Plus Corp | Insurance Australia vs. SIVERS SEMICONDUCTORS AB | Insurance Australia vs. CHINA HUARONG ENERHD 50 | Insurance Australia vs. NORDIC HALIBUT AS |
| Karoon Energy vs. Hitachi Construction Machinery | Karoon Energy vs. Clean Energy Fuels | Karoon Energy vs. TITAN MACHINERY | Karoon Energy vs. Daito Trust Construction |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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