Correlation Between Netflix and AIICO INSURANCE

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

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

Diversification Opportunities for Netflix and AIICO INSURANCE

-0.03

Correlation Coefficient

Netflix  AIICO INSURANCE

Good diversification

The 3 months correlation between Netflix and AIICO is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Netflix 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 Netflix 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 Netflix 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 Netflix i.e., Netflix and AIICO INSURANCE go up and down completely randomly.

Pair Corralation between Netflix and AIICO INSURANCE

Given the investment horizon of 90 days Netflix is expected to generate 2.82 times less return on investment than AIICO INSURANCE. But when comparing it to its historical volatility, Netflix is 1.61 times less risky than AIICO INSURANCE. It trades about 0.04 of its potential returns per unit of risk. AIICO INSURANCE PLC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  143.00  in AIICO INSURANCE PLC on December 30, 2024 and sell it today you would earn a total of  17.00  from holding AIICO INSURANCE PLC or generate 11.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

Netflix  vs.  AIICO INSURANCE PLC

Netflix

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Netflix is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 weak fundamental indicators, AIICO INSURANCE showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Netflix and AIICO INSURANCE

The main advantage of trading using opposite Netflix and AIICO INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix 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 Netflix 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.