Correlation Between MSAD INSURANCE and INSURANCE AUST

Can any of the company-specific risk be diversified away by investing in both MSAD INSURANCE 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 MSAD INSURANCE and INSURANCE AUST into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MSAD INSURANCE and INSURANCE AUST GRP, you can compare the effects of market volatilities on MSAD INSURANCE 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 MSAD INSURANCE with a short position of INSURANCE AUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSAD INSURANCE and INSURANCE AUST.

Diversification Opportunities for MSAD INSURANCE and INSURANCE AUST

-0.01

Correlation Coefficient

MSAD INSURANCE  INSURANCE AUST

Good diversification

The 3 months correlation between MSAD and INSURANCE is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding MSAD INSURANCE 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 MSAD INSURANCE 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 MSAD INSURANCE 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 MSAD INSURANCE i.e., MSAD INSURANCE and INSURANCE AUST go up and down completely randomly.

Pair Corralation between MSAD INSURANCE and INSURANCE AUST

Assuming the 90 days trading horizon MSAD INSURANCE is expected to under-perform the INSURANCE AUST. But the stock apears to be less risky and, when comparing its historical volatility, MSAD INSURANCE is 1.16 times less risky than INSURANCE AUST. The stock trades about -0.1 of its potential returns per unit of risk. The INSURANCE AUST GRP is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  452.00  in INSURANCE AUST GRP on October 21, 2024 and sell it today you would earn a total of  63.00  from holding INSURANCE AUST GRP or generate 13.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

MSAD INSURANCE  vs.  INSURANCE AUST GRP

MSAD INSURANCE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MSAD INSURANCE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

INSURANCE AUST GRP

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in INSURANCE AUST GRP are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, INSURANCE AUST exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MSAD INSURANCE and INSURANCE AUST

The main advantage of trading using opposite MSAD INSURANCE and INSURANCE AUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSAD INSURANCE 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.

The idea behind MSAD INSURANCE and INSURANCE AUST GRP pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..