Correlation Between Australis Capital and Life Insurance

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

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

Diversification Opportunities for Australis Capital and Life Insurance

0.16

Correlation Coefficient

Australis Capital  Life Insurance

Average diversification

The 3 months correlation between Australis and Life is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Australis Capital and Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Insurance and Australis Capital 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 Australis Capital are associated (or correlated) with Life Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Insurance has no effect on the direction of Australis Capital i.e., Australis Capital and Life Insurance go up and down completely randomly.

Pair Corralation between Australis Capital and Life Insurance

Assuming the 90 days horizon Australis Capital is expected to generate 35.67 times more return on investment than Life Insurance. However, Australis Capital is 35.67 times more volatile than Life Insurance. It trades about 0.17 of its potential returns per unit of risk. Life Insurance is currently generating about -0.19 per unit of risk. If you would invest  0.01  in Australis Capital on December 21, 2024 and sell it today you would earn a total of  0.00  from holding Australis Capital or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Australis Capital  vs.  Life Insurance

Australis Capital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Australis Capital are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly sluggish basic indicators, Australis Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Life Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Life Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Australis Capital and Life Insurance

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

The idea behind Australis Capital and Life Insurance 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.