Correlation Between NEM INSURANCE and AIICO INSURANCE

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

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

Diversification Opportunities for NEM INSURANCE and AIICO INSURANCE

0.82

Correlation Coefficient

NEM INSURANCE  AIICO INSURANCE

Very poor diversification

The 3 months correlation between NEM and AIICO is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding NEM INSURANCE PLC 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 NEM 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 NEM INSURANCE PLC 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 NEM INSURANCE i.e., NEM INSURANCE and AIICO INSURANCE go up and down completely randomly.

Pair Corralation between NEM INSURANCE and AIICO INSURANCE

Assuming the 90 days trading horizon NEM INSURANCE PLC is expected to generate 0.98 times more return on investment than AIICO INSURANCE. However, NEM INSURANCE PLC is 1.02 times less risky than AIICO INSURANCE. It trades about 0.28 of its potential returns per unit of risk. AIICO INSURANCE PLC is currently generating about 0.18 per unit of risk. If you would invest  1,400  in NEM INSURANCE PLC on April 30, 2025 and sell it today you would earn a total of  890.00  from holding NEM INSURANCE PLC or generate 63.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

NEM INSURANCE PLC  vs.  AIICO INSURANCE PLC

NEM INSURANCE PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NEM INSURANCE PLC are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, NEM INSURANCE unveiled solid returns over the last few months and may actually be approaching a breakup point.

AIICO INSURANCE PLC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AIICO INSURANCE PLC are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent fundamental indicators, AIICO INSURANCE showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NEM INSURANCE and AIICO INSURANCE

The main advantage of trading using opposite NEM INSURANCE and AIICO INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEM INSURANCE 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 NEM INSURANCE PLC 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.