Correlation Between General Insurance and Sumeet Industries

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

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

Diversification Opportunities for General Insurance and Sumeet Industries

0.02

Correlation Coefficient

General Insurance  Sumeet Industries

Significant diversification

The 3 months correlation between General and Sumeet is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding General Insurance and Sumeet Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumeet Industries 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 Sumeet Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumeet Industries has no effect on the direction of General Insurance i.e., General Insurance and Sumeet Industries go up and down completely randomly.

Pair Corralation between General Insurance and Sumeet Industries

If you would invest  36,650  in General Insurance on September 22, 2024 and sell it today you would earn a total of  13,450  from holding General Insurance or generate 36.7% return on investment over 90 days.

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

General Insurance  vs.  Sumeet Industries Limited

General Insurance

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in General Insurance are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, General Insurance displayed solid returns over the last few months and may actually be approaching a breakup point.

Sumeet Industries

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sumeet Industries Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Sumeet Industries demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with General Insurance and Sumeet Industries

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

The idea behind General Insurance and Sumeet Industries 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.