Correlation Between FG Annuities and AIA Group

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

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

Diversification Opportunities for FG Annuities and AIA Group

-0.51

Correlation Coefficient

FG Annuities  AIA Group

Excellent diversification

The 3 months correlation between FG Annuities and AIA is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding FG Annuities Life and AIA Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIA Group and FG Annuities 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 FG Annuities Life are associated (or correlated) with AIA Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIA Group has no effect on the direction of FG Annuities i.e., FG Annuities and AIA Group go up and down completely randomly.

Pair Corralation between FG Annuities and AIA Group

Allowing for the 90-day total investment horizon FG Annuities Life is expected to under-perform the AIA Group. In addition to that, FG Annuities is 1.78 times more volatile than AIA Group Ltd. It trades about -0.06 of its total potential returns per unit of risk. AIA Group Ltd is currently generating about 0.06 per unit of volatility. If you would invest  2,901  in AIA Group Ltd on December 30, 2024 and sell it today you would earn a total of  153.00  from holding AIA Group Ltd or generate 5.27% return on investment over 90 days.

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

FG Annuities Life  vs.  AIA Group Ltd

FG Annuities Life

Risk-Adjusted Performance

Very Weak

Over the last 90 days FG Annuities Life has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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.

Pair Trading with FG Annuities and AIA Group

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

The idea behind FG Annuities Life and AIA Group Ltd 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.