Correlation Between AIICO INSURANCE and CUSTODIAN INVESTMENT

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

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

Diversification Opportunities for AIICO INSURANCE and CUSTODIAN INVESTMENT

0.79

Correlation Coefficient

AIICO INSURANCE  CUSTODIAN INVESTMENT

Poor diversification

The 3 months correlation between AIICO and CUSTODIAN is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding AIICO INSURANCE PLC and CUSTODIAN INVESTMENT PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CUSTODIAN INVESTMENT PLC and AIICO INSURANCE 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 AIICO INSURANCE PLC are associated (or correlated) with CUSTODIAN INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CUSTODIAN INVESTMENT PLC has no effect on the direction of AIICO INSURANCE i.e., AIICO INSURANCE and CUSTODIAN INVESTMENT go up and down completely randomly.

Pair Corralation between AIICO INSURANCE and CUSTODIAN INVESTMENT

Assuming the 90 days trading horizon AIICO INSURANCE is expected to generate 1.67 times less return on investment than CUSTODIAN INVESTMENT. But when comparing it to its historical volatility, AIICO INSURANCE PLC is 1.08 times less risky than CUSTODIAN INVESTMENT. It trades about 0.23 of its potential returns per unit of risk. CUSTODIAN INVESTMENT PLC is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  1,795  in CUSTODIAN INVESTMENT PLC on May 8, 2025 and sell it today you would earn a total of  2,120  from holding CUSTODIAN INVESTMENT PLC or generate 118.11% return on investment over 90 days.

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

AIICO INSURANCE PLC  vs.  CUSTODIAN INVESTMENT PLC

AIICO INSURANCE PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AIICO INSURANCE PLC are ranked lower than 18 (%) 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.

CUSTODIAN INVESTMENT PLC

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in CUSTODIAN INVESTMENT PLC are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, CUSTODIAN INVESTMENT demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AIICO INSURANCE and CUSTODIAN INVESTMENT

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

The idea behind AIICO INSURANCE PLC and CUSTODIAN INVESTMENT 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.

Check out your portfolio center.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.