Correlation Between Life InsuranceOf and Indo Rama

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

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

Diversification Opportunities for Life InsuranceOf and Indo Rama

0.69

Correlation Coefficient

Life InsuranceOf  Indo Rama

Poor diversification

The 3 months correlation between Life and Indo is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Life Insurance and Indo Rama Synthetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Rama Synthetics and Life InsuranceOf 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 Life Insurance are associated (or correlated) with Indo Rama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Rama Synthetics has no effect on the direction of Life InsuranceOf i.e., Life InsuranceOf and Indo Rama go up and down completely randomly.

Pair Corralation between Life InsuranceOf and Indo Rama

Assuming the 90 days trading horizon Life Insurance is expected to under-perform the Indo Rama. But the stock apears to be less risky and, when comparing its historical volatility, Life Insurance is 2.0 times less risky than Indo Rama. The stock trades about -0.12 of its potential returns per unit of risk. The Indo Rama Synthetics is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  4,015  in Indo Rama Synthetics on December 23, 2024 and sell it today you would lose (446.00) from holding Indo Rama Synthetics or give up 11.11% of portfolio value over 90 days.

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

Life Insurance  vs.  Indo Rama Synthetics

Life InsuranceOf

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Indo Rama Synthetics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Indo Rama Synthetics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Life InsuranceOf and Indo Rama

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

The idea behind Life Insurance and Indo Rama Synthetics 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.