Correlation Between REVO INSURANCE and AJ LUCAS

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

By analyzing existing cross correlation between REVO INSURANCE SPA and AJ LUCAS GROUP, you can compare the effects of market volatilities on REVO INSURANCE and AJ LUCAS 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 REVO INSURANCE with a short position of AJ LUCAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of REVO INSURANCE and AJ LUCAS.

Diversification Opportunities for REVO INSURANCE and AJ LUCAS

-0.49

Correlation Coefficient

REVO INSURANCE  AJ LUCAS

Very good diversification

The 3 months correlation between REVO and FW9 is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding REVO INSURANCE SPA and AJ LUCAS GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AJ LUCAS GROUP and REVO 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 REVO INSURANCE SPA are associated (or correlated) with AJ LUCAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AJ LUCAS GROUP has no effect on the direction of REVO INSURANCE i.e., REVO INSURANCE and AJ LUCAS go up and down completely randomly.

Pair Corralation between REVO INSURANCE and AJ LUCAS

Assuming the 90 days horizon REVO INSURANCE is expected to generate 13.32 times less return on investment than AJ LUCAS. But when comparing it to its historical volatility, REVO INSURANCE SPA is 26.88 times less risky than AJ LUCAS. It trades about 0.22 of its potential returns per unit of risk. AJ LUCAS GROUP is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.15  in AJ LUCAS GROUP on September 4, 2024 and sell it today you would lose (0.05) from holding AJ LUCAS GROUP or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

REVO INSURANCE SPA  vs.  AJ LUCAS GROUP

REVO INSURANCE SPA

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in REVO INSURANCE SPA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, REVO INSURANCE reported solid returns over the last few months and may actually be approaching a breakup point.

AJ LUCAS GROUP

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AJ LUCAS GROUP are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AJ LUCAS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with REVO INSURANCE and AJ LUCAS

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

The idea behind REVO INSURANCE SPA and AJ LUCAS GROUP 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.