Correlation Between YH Dimri and Libra Insurance

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

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

Diversification Opportunities for YH Dimri and Libra Insurance

0.74

Correlation Coefficient

YH Dimri  Libra Insurance

Poor diversification

The 3 months correlation between DIMRI and Libra is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding YH Dimri Construction and Libra Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Libra Insurance and YH Dimri 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 YH Dimri Construction are associated (or correlated) with Libra Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Libra Insurance has no effect on the direction of YH Dimri i.e., YH Dimri and Libra Insurance go up and down completely randomly.

Pair Corralation between YH Dimri and Libra Insurance

Assuming the 90 days trading horizon YH Dimri is expected to generate 2.22 times less return on investment than Libra Insurance. But when comparing it to its historical volatility, YH Dimri Construction is 1.36 times less risky than Libra Insurance. It trades about 0.12 of its potential returns per unit of risk. Libra Insurance is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  33,773  in Libra Insurance on September 4, 2024 and sell it today you would earn a total of  53,517  from holding Libra Insurance or generate 158.46% return on investment over 90 days.

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

YH Dimri Construction  vs.  Libra Insurance

YH Dimri Construction

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in YH Dimri Construction are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, YH Dimri may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Libra Insurance

Risk-Adjusted Performance

34 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Libra Insurance are ranked lower than 34 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Libra Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with YH Dimri and Libra Insurance

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

The idea behind YH Dimri Construction and Libra Insurance 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.