Correlation Between AIA Group and Jackson Financial

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

By analyzing existing cross correlation between AIA Group Ltd and Jackson Financial, you can compare the effects of market volatilities on AIA Group and Jackson Financial 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 AIA Group with a short position of Jackson Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIA Group and Jackson Financial.

Diversification Opportunities for AIA Group and Jackson Financial

-0.42

Correlation Coefficient

AIA Group  Jackson Financial

Very good diversification

The 3 months correlation between AIA and Jackson is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding AIA Group Ltd and Jackson Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackson Financial and AIA Group 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 AIA Group Ltd are associated (or correlated) with Jackson Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jackson Financial has no effect on the direction of AIA Group i.e., AIA Group and Jackson Financial go up and down completely randomly.

Pair Corralation between AIA Group and Jackson Financial

Assuming the 90 days horizon AIA Group Ltd is expected to generate 2.58 times more return on investment than Jackson Financial. However, AIA Group is 2.58 times more volatile than Jackson Financial. It trades about 0.05 of its potential returns per unit of risk. Jackson Financial is currently generating about -0.02 per unit of risk. If you would invest  2,901  in AIA Group Ltd on December 28, 2024 and sell it today you would earn a total of  135.00  from holding AIA Group Ltd or generate 4.65% return on investment over 90 days.

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

AIA Group Ltd  vs.  Jackson Financial

AIA Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AIA Group Ltd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, AIA Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jackson Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jackson Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Jackson Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AIA Group and Jackson Financial

The main advantage of trading using opposite AIA Group and Jackson Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIA Group position performs unexpectedly, Jackson Financial 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 Jackson Financial will offset losses from the drop in Jackson Financial's long position.

The idea behind AIA Group Ltd and Jackson Financial 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.