Correlation Between Indara Insurance and RS Public

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

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

Diversification Opportunities for Indara Insurance and RS Public

0.74

Correlation Coefficient

Indara Insurance  RS Public

Poor diversification

The 3 months correlation between Indara and RS Public is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Indara Insurance Public and RS Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RS Public and Indara 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 Indara Insurance Public are associated (or correlated) with RS Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RS Public has no effect on the direction of Indara Insurance i.e., Indara Insurance and RS Public go up and down completely randomly.

Pair Corralation between Indara Insurance and RS Public

Assuming the 90 days trading horizon Indara Insurance is expected to generate 1.09 times less return on investment than RS Public. In addition to that, Indara Insurance is 1.0 times more volatile than RS Public. It trades about 0.04 of its total potential returns per unit of risk. RS Public is currently generating about 0.04 per unit of volatility. If you would invest  714.00  in RS Public on October 4, 2024 and sell it today you would lose (169.00) from holding RS Public or give up 23.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

Indara Insurance Public  vs.  RS Public

Indara Insurance Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indara Insurance Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

RS Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RS Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, RS Public is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Indara Insurance and RS Public

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

The idea behind Indara Insurance Public and RS Public 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.