Correlation Between NYSE Composite and AIA Group
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and AIA Group 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 NYSE Composite and AIA Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and AIA Group Ltd, you can compare the effects of market volatilities on NYSE Composite and AIA Group 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 NYSE Composite with a short position of AIA Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and AIA Group.
Diversification Opportunities for NYSE Composite and AIA Group
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NYSE and AIA is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and AIA Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIA Group and NYSE Composite 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 NYSE Composite are associated (or correlated) with AIA Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIA Group has no effect on the direction of NYSE Composite i.e., NYSE Composite and AIA Group go up and down completely randomly.
Pair Corralation between NYSE Composite and AIA Group
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.37 times more return on investment than AIA Group. However, NYSE Composite is 2.74 times less risky than AIA Group. It trades about 0.08 of its potential returns per unit of risk. AIA Group Ltd is currently generating about -0.03 per unit of risk. If you would invest 1,551,444 in NYSE Composite on August 31, 2024 and sell it today you would earn a total of 475,760 from holding NYSE Composite or generate 30.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
NYSE Composite vs. AIA Group Ltd
Performance |
| Timeline |
NYSE Composite and AIA Group Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
AIA Group Ltd
Pair trading matchups for AIA Group
Pair Trading with NYSE Composite and AIA Group
The main advantage of trading using opposite NYSE Composite and AIA Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, AIA Group 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 AIA Group will offset losses from the drop in AIA Group's long position.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
| AIA Group vs. Atlantic American | AIA Group vs. Ping An Insurance | AIA Group vs. China Life Insurance | AIA Group vs. Sanlam Ltd PK |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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