Correlation Between AIICO INSURANCE and GOLDEN GUINEA

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

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

Diversification Opportunities for AIICO INSURANCE and GOLDEN GUINEA

0.23

Correlation Coefficient

AIICO INSURANCE  GOLDEN GUINEA

Modest diversification

The 3 months correlation between AIICO and GOLDEN is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding AIICO INSURANCE PLC and GOLDEN GUINEA BREWERIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLDEN GUINEA BREWERIES and AIICO 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 AIICO INSURANCE PLC are associated (or correlated) with GOLDEN GUINEA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOLDEN GUINEA BREWERIES has no effect on the direction of AIICO INSURANCE i.e., AIICO INSURANCE and GOLDEN GUINEA go up and down completely randomly.

Pair Corralation between AIICO INSURANCE and GOLDEN GUINEA

Assuming the 90 days trading horizon AIICO INSURANCE PLC is expected to generate 2.44 times more return on investment than GOLDEN GUINEA. However, AIICO INSURANCE is 2.44 times more volatile than GOLDEN GUINEA BREWERIES. It trades about 0.04 of its potential returns per unit of risk. GOLDEN GUINEA BREWERIES is currently generating about -0.18 per unit of risk. If you would invest  149.00  in AIICO INSURANCE PLC on December 25, 2024 and sell it today you would earn a total of  9.00  from holding AIICO INSURANCE PLC or generate 6.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

AIICO INSURANCE PLC  vs.  GOLDEN GUINEA BREWERIES

AIICO INSURANCE PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AIICO INSURANCE PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, AIICO INSURANCE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

GOLDEN GUINEA BREWERIES

Risk-Adjusted Performance

Very Weak

Over the last 90 days GOLDEN GUINEA BREWERIES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with AIICO INSURANCE and GOLDEN GUINEA

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

The idea behind AIICO INSURANCE PLC and GOLDEN GUINEA BREWERIES 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 Stocks Directory module to find actively traded stocks across global markets.