Correlation Between Invest Capital and EFU General

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

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

Diversification Opportunities for Invest Capital and EFU General

-0.64

Correlation Coefficient

Invest Capital  EFU General

Excellent diversification

The 3 months correlation between Invest and EFU is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Invest Capital Investment and EFU General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EFU General Insurance and Invest Capital 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 Invest Capital Investment are associated (or correlated) with EFU General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EFU General Insurance has no effect on the direction of Invest Capital i.e., Invest Capital and EFU General go up and down completely randomly.

Pair Corralation between Invest Capital and EFU General

Assuming the 90 days trading horizon Invest Capital Investment is expected to under-perform the EFU General. In addition to that, Invest Capital is 1.27 times more volatile than EFU General Insurance. It trades about -0.09 of its total potential returns per unit of risk. EFU General Insurance is currently generating about 0.13 per unit of volatility. If you would invest  10,830  in EFU General Insurance on December 22, 2024 and sell it today you would earn a total of  2,202  from holding EFU General Insurance or generate 20.33% return on investment over 90 days.

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

Invest Capital Investment  vs.  EFU General Insurance

Invest Capital Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invest Capital Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

EFU General Insurance

Risk-Adjusted Performance

OK

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

Pair Trading with Invest Capital and EFU General

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

The idea behind Invest Capital Investment and EFU 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.