Correlation Between AstraZeneca PLC and Safety Insurance

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

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

Diversification Opportunities for AstraZeneca PLC and Safety Insurance

-0.58

Correlation Coefficient

AstraZeneca PLC  Safety Insurance

Excellent diversification

The 3 months correlation between AstraZeneca and Safety is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding AstraZeneca PLC and Safety Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Insurance and AstraZeneca PLC 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 AstraZeneca PLC are associated (or correlated) with Safety Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Insurance has no effect on the direction of AstraZeneca PLC i.e., AstraZeneca PLC and Safety Insurance go up and down completely randomly.

Pair Corralation between AstraZeneca PLC and Safety Insurance

Assuming the 90 days trading horizon AstraZeneca PLC is expected to generate 0.63 times more return on investment than Safety Insurance. However, AstraZeneca PLC is 1.58 times less risky than Safety Insurance. It trades about 0.25 of its potential returns per unit of risk. Safety Insurance Group is currently generating about -0.05 per unit of risk. If you would invest  12,645  in AstraZeneca PLC on October 14, 2024 and sell it today you would earn a total of  480.00  from holding AstraZeneca PLC or generate 3.8% return on investment over 90 days.

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

AstraZeneca PLC  vs.  Safety Insurance Group

AstraZeneca PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AstraZeneca PLC 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.

Safety Insurance

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Safety Insurance Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Safety Insurance may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with AstraZeneca PLC and Safety Insurance

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

The idea behind AstraZeneca PLC and Safety Insurance 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.