Correlation Between Charan Insurance and Laguna Resorts

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

By analyzing existing cross correlation between Charan Insurance Public and Laguna Resorts Hotels, you can compare the effects of market volatilities on Charan Insurance and Laguna Resorts 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 Charan Insurance with a short position of Laguna Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charan Insurance and Laguna Resorts.

Diversification Opportunities for Charan Insurance and Laguna Resorts

-0.26

Correlation Coefficient

Charan Insurance  Laguna Resorts

Very good diversification

The 3 months correlation between Charan and Laguna is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Charan Insurance Public and Laguna Resorts Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laguna Resorts Hotels and Charan 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 Charan Insurance Public are associated (or correlated) with Laguna Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laguna Resorts Hotels has no effect on the direction of Charan Insurance i.e., Charan Insurance and Laguna Resorts go up and down completely randomly.

Pair Corralation between Charan Insurance and Laguna Resorts

Assuming the 90 days trading horizon Charan Insurance is expected to generate 1.01 times less return on investment than Laguna Resorts. In addition to that, Charan Insurance is 1.0 times more volatile than Laguna Resorts Hotels. It trades about 0.06 of its total potential returns per unit of risk. Laguna Resorts Hotels is currently generating about 0.06 per unit of volatility. If you would invest  3,924  in Laguna Resorts Hotels on October 7, 2024 and sell it today you would earn a total of  1.00  from holding Laguna Resorts Hotels or generate 0.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.54%
Values	Daily Returns

Charan Insurance Public  vs.  Laguna Resorts Hotels

Charan Insurance Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charan Insurance Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Charan Insurance is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Laguna Resorts Hotels

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Laguna Resorts Hotels are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical indicators, Laguna Resorts is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Charan Insurance and Laguna Resorts

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

The idea behind Charan Insurance Public and Laguna Resorts Hotels 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.