Correlation Between Techtronic Industries and INSURANCE AUST
Can any of the company-specific risk be diversified away by investing in both Techtronic Industries and INSURANCE AUST 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 Techtronic Industries and INSURANCE AUST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Techtronic Industries and INSURANCE AUST GRP, you can compare the effects of market volatilities on Techtronic Industries and INSURANCE AUST 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 Techtronic Industries with a short position of INSURANCE AUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Techtronic Industries and INSURANCE AUST.
Diversification Opportunities for Techtronic Industries and INSURANCE AUST
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Techtronic and INSURANCE is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Techtronic Industries and INSURANCE AUST GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INSURANCE AUST GRP and Techtronic Industries 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 Techtronic Industries are associated (or correlated) with INSURANCE AUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INSURANCE AUST GRP has no effect on the direction of Techtronic Industries i.e., Techtronic Industries and INSURANCE AUST go up and down completely randomly.
Pair Corralation between Techtronic Industries and INSURANCE AUST
Assuming the 90 days trading horizon Techtronic Industries is expected to generate 1.33 times more return on investment than INSURANCE AUST. However, Techtronic Industries is 1.33 times more volatile than INSURANCE AUST GRP. It trades about 0.06 of its potential returns per unit of risk. INSURANCE AUST GRP is currently generating about 0.07 per unit of risk. If you would invest 1,245 in Techtronic Industries on September 17, 2024 and sell it today you would earn a total of 31.00 from holding Techtronic Industries or generate 2.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Techtronic Industries vs. INSURANCE AUST GRP
Performance |
| Timeline |
| Techtronic Industries |
| INSURANCE AUST GRP |
Techtronic Industries and INSURANCE AUST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Techtronic Industries and INSURANCE AUST
The main advantage of trading using opposite Techtronic Industries and INSURANCE AUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Techtronic Industries position performs unexpectedly, INSURANCE AUST 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 INSURANCE AUST will offset losses from the drop in INSURANCE AUST's long position.| Techtronic Industries vs. INSURANCE AUST GRP | Techtronic Industries vs. LION ONE METALS | Techtronic Industries vs. Ping An Insurance | Techtronic Industries vs. MCEWEN MINING INC |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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