Correlation Between INSURANCE AUST and Kurita Water

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

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

Diversification Opportunities for INSURANCE AUST and Kurita Water

-0.24

Correlation Coefficient

INSURANCE AUST  Kurita Water

Very good diversification

The 3 months correlation between INSURANCE and Kurita is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding INSURANCE AUST GRP and Kurita Water Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kurita Water Industries and INSURANCE AUST 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 INSURANCE AUST GRP are associated (or correlated) with Kurita Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kurita Water Industries has no effect on the direction of INSURANCE AUST i.e., INSURANCE AUST and Kurita Water go up and down completely randomly.

Pair Corralation between INSURANCE AUST and Kurita Water

Assuming the 90 days trading horizon INSURANCE AUST GRP is expected to generate 0.98 times more return on investment than Kurita Water. However, INSURANCE AUST GRP is 1.02 times less risky than Kurita Water. It trades about -0.12 of its potential returns per unit of risk. Kurita Water Industries is currently generating about -0.27 per unit of risk. If you would invest  515.00  in INSURANCE AUST GRP on October 6, 2024 and sell it today you would lose (17.00) from holding INSURANCE AUST GRP or give up 3.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

INSURANCE AUST GRP  vs.  Kurita Water Industries

INSURANCE AUST GRP

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in INSURANCE AUST GRP are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, INSURANCE AUST may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Kurita Water Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kurita Water Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with INSURANCE AUST and Kurita Water

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

The idea behind INSURANCE AUST GRP and Kurita Water Industries 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.