Correlation Between JS Investments and Reliance Insurance

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

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

Diversification Opportunities for JS Investments and Reliance Insurance

0.73

Correlation Coefficient

JS Investments  Reliance Insurance

Poor diversification

The 3 months correlation between JSIL and Reliance is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding JS Investments and Reliance Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Insurance and JS Investments 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 JS Investments are associated (or correlated) with Reliance Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Insurance has no effect on the direction of JS Investments i.e., JS Investments and Reliance Insurance go up and down completely randomly.

Pair Corralation between JS Investments and Reliance Insurance

Assuming the 90 days trading horizon JS Investments is expected to generate 0.87 times more return on investment than Reliance Insurance. However, JS Investments is 1.15 times less risky than Reliance Insurance. It trades about -0.09 of its potential returns per unit of risk. Reliance Insurance Co is currently generating about -0.15 per unit of risk. If you would invest  2,469  in JS Investments on October 8, 2024 and sell it today you would lose (210.00) from holding JS Investments or give up 8.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

JS Investments  vs.  Reliance Insurance Co

JS Investments

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JS Investments are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JS Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Reliance Insurance

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Reliance Insurance Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Reliance Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JS Investments and Reliance Insurance

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

The idea behind JS Investments and Reliance Insurance Co 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.