Correlation Between IBL HealthCare and Shaheen Insurance

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

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

Diversification Opportunities for IBL HealthCare and Shaheen Insurance

-0.46

Correlation Coefficient

IBL HealthCare  Shaheen Insurance

Very good diversification

The 3 months correlation between IBL and Shaheen is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding IBL HealthCare and Shaheen Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaheen Insurance and IBL HealthCare 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 IBL HealthCare are associated (or correlated) with Shaheen Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaheen Insurance has no effect on the direction of IBL HealthCare i.e., IBL HealthCare and Shaheen Insurance go up and down completely randomly.

Pair Corralation between IBL HealthCare and Shaheen Insurance

Assuming the 90 days trading horizon IBL HealthCare is expected to under-perform the Shaheen Insurance. But the stock apears to be less risky and, when comparing its historical volatility, IBL HealthCare is 1.85 times less risky than Shaheen Insurance. The stock trades about -0.39 of its potential returns per unit of risk. The Shaheen Insurance is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  655.00  in Shaheen Insurance on December 4, 2024 and sell it today you would earn a total of  26.00  from holding Shaheen Insurance or generate 3.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

IBL HealthCare  vs.  Shaheen Insurance

IBL HealthCare

Risk-Adjusted Performance

Very Weak

Over the last 90 days IBL HealthCare has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Shaheen Insurance

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shaheen Insurance are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shaheen Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IBL HealthCare and Shaheen Insurance

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

The idea behind IBL HealthCare and Shaheen 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.