Correlation Between Insurance Australia and POSCO Holdings
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and POSCO Holdings 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 POSCO Holdings 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 POSCO Holdings, you can compare the effects of market volatilities on Insurance Australia and POSCO Holdings 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 POSCO Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and POSCO Holdings.
Diversification Opportunities for Insurance Australia and POSCO Holdings
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Insurance and POSCO is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings 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 POSCO Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSCO Holdings has no effect on the direction of Insurance Australia i.e., Insurance Australia and POSCO Holdings go up and down completely randomly.
Pair Corralation between Insurance Australia and POSCO Holdings
Assuming the 90 days horizon Insurance Australia Group is expected to generate 0.85 times more return on investment than POSCO Holdings. However, Insurance Australia Group is 1.17 times less risky than POSCO Holdings. It trades about 0.28 of its potential returns per unit of risk. POSCO Holdings is currently generating about -0.26 per unit of risk. If you would invest 442.00 in Insurance Australia Group on August 31, 2024 and sell it today you would earn a total of 68.00 from holding Insurance Australia Group or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Insurance Australia Group vs. POSCO Holdings
Performance |
| Timeline |
| Insurance Australia |
| POSCO Holdings |
Insurance Australia and POSCO Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and POSCO Holdings
The main advantage of trading using opposite Insurance Australia and POSCO Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, POSCO Holdings 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 POSCO Holdings will offset losses from the drop in POSCO Holdings' long position.| Insurance Australia vs. BURLINGTON STORES | Insurance Australia vs. DELTA AIR LINES | Insurance Australia vs. Burlington Stores | Insurance Australia vs. SEALED AIR |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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