Correlation Between Hawsons Iron and Insurance Australia

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

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

Diversification Opportunities for Hawsons Iron and Insurance Australia

0.53

Correlation Coefficient

Hawsons Iron  Insurance Australia

Very weak diversification

The 3 months correlation between Hawsons and Insurance is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Hawsons Iron and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia and Hawsons Iron 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 Hawsons Iron are associated (or correlated) with Insurance Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insurance Australia has no effect on the direction of Hawsons Iron i.e., Hawsons Iron and Insurance Australia go up and down completely randomly.

Pair Corralation between Hawsons Iron and Insurance Australia

Assuming the 90 days trading horizon Hawsons Iron is expected to generate 2.72 times more return on investment than Insurance Australia. However, Hawsons Iron is 2.72 times more volatile than Insurance Australia Group. It trades about -0.03 of its potential returns per unit of risk. Insurance Australia Group is currently generating about -0.07 per unit of risk. If you would invest  1.80  in Hawsons Iron on December 23, 2024 and sell it today you would lose (0.30) from holding Hawsons Iron or give up 16.67% of portfolio value over 90 days.

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

Hawsons Iron  vs.  Insurance Australia Group

Hawsons Iron

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hawsons Iron has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Insurance Australia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Insurance Australia Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Hawsons Iron and Insurance Australia

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

The idea behind Hawsons Iron and Insurance Australia 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..