Correlation Between G Tec and General Insurance

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

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

Diversification Opportunities for G Tec and General Insurance

-0.21

Correlation Coefficient

G Tec  General Insurance

Very good diversification

The 3 months correlation between GTECJAINX and General is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding G Tec Jainx Education and General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Insurance and G Tec 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 G Tec Jainx Education are associated (or correlated) with General Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Insurance has no effect on the direction of G Tec i.e., G Tec and General Insurance go up and down completely randomly.

Pair Corralation between G Tec and General Insurance

Assuming the 90 days trading horizon G Tec is expected to generate 3.67 times less return on investment than General Insurance. In addition to that, G Tec is 1.17 times more volatile than General Insurance. It trades about 0.02 of its total potential returns per unit of risk. General Insurance is currently generating about 0.08 per unit of volatility. If you would invest  17,068  in General Insurance on September 27, 2024 and sell it today you would earn a total of  29,822  from holding General Insurance or generate 174.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	79.26%
Values	Daily Returns

G Tec Jainx Education  vs.  General Insurance

G Tec Jainx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days G Tec Jainx Education has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

General Insurance

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Insurance are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, General Insurance displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with G Tec and General Insurance

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

The idea behind G Tec Jainx Education and General 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.