Correlation Between AFRICAN ALLIANCE and INDUSTRIAL MEDICAL

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

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

Diversification Opportunities for AFRICAN ALLIANCE and INDUSTRIAL MEDICAL

0.0

Correlation Coefficient

AFRICAN ALLIANCE  INDUSTRIAL MEDICAL

Pay attention - limited upside

The 3 months correlation between AFRICAN and INDUSTRIAL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AFRICAN ALLIANCE INSURANCE and INDUSTRIAL MEDICAL GASES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDUSTRIAL MEDICAL GASES and AFRICAN ALLIANCE 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 AFRICAN ALLIANCE INSURANCE are associated (or correlated) with INDUSTRIAL MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDUSTRIAL MEDICAL GASES has no effect on the direction of AFRICAN ALLIANCE i.e., AFRICAN ALLIANCE and INDUSTRIAL MEDICAL go up and down completely randomly.

Pair Corralation between AFRICAN ALLIANCE and INDUSTRIAL MEDICAL

If you would invest  3,190  in INDUSTRIAL MEDICAL GASES on September 3, 2024 and sell it today you would earn a total of  605.00  from holding INDUSTRIAL MEDICAL GASES or generate 18.97% return on investment over 90 days.

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

AFRICAN ALLIANCE INSURANCE  vs.  INDUSTRIAL MEDICAL GASES

AFRICAN ALLIANCE INS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AFRICAN ALLIANCE INSURANCE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AFRICAN ALLIANCE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

INDUSTRIAL MEDICAL GASES

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in INDUSTRIAL MEDICAL GASES are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, INDUSTRIAL MEDICAL unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AFRICAN ALLIANCE and INDUSTRIAL MEDICAL

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

The idea behind AFRICAN ALLIANCE INSURANCE and INDUSTRIAL MEDICAL GASES 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.