Correlation Between General Insurance and Angel One

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

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

Diversification Opportunities for General Insurance and Angel One

0.08

Correlation Coefficient

General Insurance  Angel One

Significant diversification

The 3 months correlation between General and Angel is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding General Insurance and Angel One Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angel One Limited and General 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 General Insurance are associated (or correlated) with Angel One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Angel One Limited has no effect on the direction of General Insurance i.e., General Insurance and Angel One go up and down completely randomly.

Pair Corralation between General Insurance and Angel One

Assuming the 90 days trading horizon General Insurance is expected to generate 1.32 times more return on investment than Angel One. However, General Insurance is 1.32 times more volatile than Angel One Limited. It trades about -0.07 of its potential returns per unit of risk. Angel One Limited is currently generating about -0.17 per unit of risk. If you would invest  48,055  in General Insurance on October 23, 2024 and sell it today you would lose (2,900) from holding General Insurance or give up 6.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

General Insurance  vs.  Angel One Limited

General Insurance

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Insurance are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, General Insurance displayed solid returns over the last few months and may actually be approaching a breakup point.

Angel One Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Angel One Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with General Insurance and Angel One

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

The idea behind General Insurance and Angel One Limited 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.