Correlation Between ITTEFAQ Iron and Premier Insurance

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

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

Diversification Opportunities for ITTEFAQ Iron and Premier Insurance

-0.1

Correlation Coefficient

ITTEFAQ Iron  Premier Insurance

Good diversification

The 3 months correlation between ITTEFAQ and Premier is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding ITTEFAQ Iron Industries and Premier Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Insurance and ITTEFAQ Iron 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 ITTEFAQ Iron Industries are associated (or correlated) with Premier Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Insurance has no effect on the direction of ITTEFAQ Iron i.e., ITTEFAQ Iron and Premier Insurance go up and down completely randomly.

Pair Corralation between ITTEFAQ Iron and Premier Insurance

Assuming the 90 days trading horizon ITTEFAQ Iron Industries is expected to generate 0.54 times more return on investment than Premier Insurance. However, ITTEFAQ Iron Industries is 1.84 times less risky than Premier Insurance. It trades about 0.04 of its potential returns per unit of risk. Premier Insurance is currently generating about 0.02 per unit of risk. If you would invest  537.00  in ITTEFAQ Iron Industries on October 15, 2024 and sell it today you would earn a total of  227.00  from holding ITTEFAQ Iron Industries or generate 42.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	68.46%
Values	Daily Returns

ITTEFAQ Iron Industries  vs.  Premier Insurance

ITTEFAQ Iron Industries

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ITTEFAQ Iron Industries are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, ITTEFAQ Iron reported solid returns over the last few months and may actually be approaching a breakup point.

Premier Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Premier Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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.

Pair Trading with ITTEFAQ Iron and Premier Insurance

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

The idea behind ITTEFAQ Iron Industries and Premier 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.