Correlation Between Janashakthi Insurance and Hatton National

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

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

Diversification Opportunities for Janashakthi Insurance and Hatton National

0.32

Correlation Coefficient

Janashakthi Insurance  Hatton National

Weak diversification

The 3 months correlation between Janashakthi and Hatton is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Janashakthi Insurance and Hatton National Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hatton National Bank and Janashakthi 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 Janashakthi Insurance are associated (or correlated) with Hatton National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hatton National Bank has no effect on the direction of Janashakthi Insurance i.e., Janashakthi Insurance and Hatton National go up and down completely randomly.

Pair Corralation between Janashakthi Insurance and Hatton National

Assuming the 90 days trading horizon Janashakthi Insurance is expected to generate 1.32 times more return on investment than Hatton National. However, Janashakthi Insurance is 1.32 times more volatile than Hatton National Bank. It trades about 0.24 of its potential returns per unit of risk. Hatton National Bank is currently generating about -0.01 per unit of risk. If you would invest  5,520  in Janashakthi Insurance on December 28, 2024 and sell it today you would earn a total of  1,860  from holding Janashakthi Insurance or generate 33.7% return on investment over 90 days.

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

Janashakthi Insurance  vs.  Hatton National Bank

Janashakthi Insurance

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Janashakthi Insurance are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Janashakthi Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Hatton National Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hatton National Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hatton National is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Janashakthi Insurance and Hatton National

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

The idea behind Janashakthi Insurance and Hatton National Bank 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.