Correlation Between AIICO INSURANCE and UPDC PLC

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Can any of the company-specific risk be diversified away by investing in both AIICO INSURANCE and UPDC PLC 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 UPDC PLC 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 UPDC PLC, you can compare the effects of market volatilities on AIICO INSURANCE and UPDC PLC 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 UPDC PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIICO INSURANCE and UPDC PLC.

Diversification Opportunities for AIICO INSURANCE and UPDC PLC

0.17
  Correlation Coefficient

Average diversification

The 3 months correlation between AIICO and UPDC is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding AIICO INSURANCE PLC and UPDC PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UPDC 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 UPDC PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UPDC PLC has no effect on the direction of AIICO INSURANCE i.e., AIICO INSURANCE and UPDC PLC go up and down completely randomly.

Pair Corralation between AIICO INSURANCE and UPDC PLC

Assuming the 90 days trading horizon AIICO INSURANCE PLC is expected to under-perform the UPDC PLC. But the stock apears to be less risky and, when comparing its historical volatility, AIICO INSURANCE PLC is 2.38 times less risky than UPDC PLC. The stock trades about -0.04 of its potential returns per unit of risk. The UPDC PLC is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  314.00  in UPDC PLC on April 6, 2025 and sell it today you would earn a total of  160.00  from holding UPDC PLC or generate 50.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy97.62%
ValuesDaily Returns

AIICO INSURANCE PLC  vs.  UPDC PLC

 Performance 
       Timeline  
AIICO INSURANCE PLC 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in AIICO INSURANCE PLC are ranked lower than 7 (%) 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.
UPDC PLC 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in UPDC PLC are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, UPDC PLC displayed solid returns over the last few months and may actually be approaching a breakup point.

AIICO INSURANCE and UPDC PLC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AIICO INSURANCE and UPDC PLC

The main advantage of trading using opposite AIICO INSURANCE and UPDC PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIICO INSURANCE position performs unexpectedly, UPDC PLC 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 UPDC PLC will offset losses from the drop in UPDC PLC's long position.
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The idea behind AIICO INSURANCE PLC and UPDC 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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