Correlation Between General Insurance and Shree Pushkar

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

By analyzing existing cross correlation between General Insurance and Shree Pushkar Chemicals, you can compare the effects of market volatilities on General Insurance and Shree Pushkar 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 Shree Pushkar. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Insurance and Shree Pushkar.

Diversification Opportunities for General Insurance and Shree Pushkar

0.76

Correlation Coefficient

General Insurance  Shree Pushkar

Poor diversification

The 3 months correlation between General and Shree is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding General Insurance and Shree Pushkar Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shree Pushkar Chemicals 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 Shree Pushkar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shree Pushkar Chemicals has no effect on the direction of General Insurance i.e., General Insurance and Shree Pushkar go up and down completely randomly.

Pair Corralation between General Insurance and Shree Pushkar

Assuming the 90 days trading horizon General Insurance is expected to generate 1.7 times less return on investment than Shree Pushkar. But when comparing it to its historical volatility, General Insurance is 1.18 times less risky than Shree Pushkar. It trades about 0.08 of its potential returns per unit of risk. Shree Pushkar Chemicals is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  25,269  in Shree Pushkar Chemicals on October 9, 2024 and sell it today you would earn a total of  5,426  from holding Shree Pushkar Chemicals or generate 21.47% return on investment over 90 days.

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

General Insurance  vs.  Shree Pushkar Chemicals

General Insurance

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Insurance are ranked lower than 6 (%) 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.

Shree Pushkar Chemicals

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shree Pushkar Chemicals are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Shree Pushkar unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with General Insurance and Shree Pushkar

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

The idea behind General Insurance and Shree Pushkar Chemicals 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.