Correlation Between LIVINGTRUST MORTGAGE and AIICO INSURANCE

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

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

Diversification Opportunities for LIVINGTRUST MORTGAGE and AIICO INSURANCE

0.35

Correlation Coefficient

LIVINGTRUST MORTGAGE  AIICO INSURANCE

Weak diversification

The 3 months correlation between LIVINGTRUST and AIICO is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding LIVINGTRUST MORTGAGE BANK and AIICO INSURANCE PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIICO INSURANCE PLC and LIVINGTRUST MORTGAGE 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 LIVINGTRUST MORTGAGE BANK are associated (or correlated) with AIICO INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIICO INSURANCE PLC has no effect on the direction of LIVINGTRUST MORTGAGE i.e., LIVINGTRUST MORTGAGE and AIICO INSURANCE go up and down completely randomly.

Pair Corralation between LIVINGTRUST MORTGAGE and AIICO INSURANCE

Assuming the 90 days trading horizon LIVINGTRUST MORTGAGE BANK is expected to generate 0.43 times more return on investment than AIICO INSURANCE. However, LIVINGTRUST MORTGAGE BANK is 2.34 times less risky than AIICO INSURANCE. It trades about 0.18 of its potential returns per unit of risk. AIICO INSURANCE PLC is currently generating about 0.06 per unit of risk. If you would invest  399.00  in LIVINGTRUST MORTGAGE BANK on December 29, 2024 and sell it today you would earn a total of  82.00  from holding LIVINGTRUST MORTGAGE BANK or generate 20.55% return on investment over 90 days.

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

LIVINGTRUST MORTGAGE BANK  vs.  AIICO INSURANCE PLC

LIVINGTRUST MORTGAGE BANK

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LIVINGTRUST MORTGAGE BANK are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, LIVINGTRUST MORTGAGE unveiled solid returns over the last few months and may actually be approaching a breakup point.

AIICO INSURANCE PLC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AIICO INSURANCE PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, AIICO INSURANCE showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LIVINGTRUST MORTGAGE and AIICO INSURANCE

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

The idea behind LIVINGTRUST MORTGAGE BANK and AIICO INSURANCE PLC 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.