Correlation Between KNR Constructions and Life Insurance

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

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

Diversification Opportunities for KNR Constructions and Life Insurance

0.35

Correlation Coefficient

KNR Constructions  Life Insurance

Weak diversification

The 3 months correlation between KNR and Life is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding KNR Constructions Limited and Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Insurance and KNR Constructions 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 KNR Constructions Limited are associated (or correlated) with Life Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Insurance has no effect on the direction of KNR Constructions i.e., KNR Constructions and Life Insurance go up and down completely randomly.

Pair Corralation between KNR Constructions and Life Insurance

Assuming the 90 days trading horizon KNR Constructions is expected to generate 1.44 times less return on investment than Life Insurance. In addition to that, KNR Constructions is 1.13 times more volatile than Life Insurance. It trades about 0.04 of its total potential returns per unit of risk. Life Insurance is currently generating about 0.06 per unit of volatility. If you would invest  56,936  in Life Insurance on October 5, 2024 and sell it today you would earn a total of  33,299  from holding Life Insurance or generate 58.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.55%
Values	Daily Returns

KNR Constructions Limited  vs.  Life Insurance

KNR Constructions

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KNR Constructions Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, KNR Constructions sustained solid returns over the last few months and may actually be approaching a breakup point.

Life Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Life Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Life Insurance is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with KNR Constructions and Life Insurance

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

The idea behind KNR Constructions Limited and Life 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.