Correlation Between Life Insurance and Sumeet Industries

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

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

Diversification Opportunities for Life Insurance and Sumeet Industries

-0.66

Correlation Coefficient

Life Insurance  Sumeet Industries

Excellent diversification

The 3 months correlation between Life and Sumeet is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Life Insurance and Sumeet Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumeet Industries and Life 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 Life Insurance are associated (or correlated) with Sumeet Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumeet Industries has no effect on the direction of Life Insurance i.e., Life Insurance and Sumeet Industries go up and down completely randomly.

Pair Corralation between Life Insurance and Sumeet Industries

Assuming the 90 days trading horizon Life Insurance is expected to under-perform the Sumeet Industries. But the stock apears to be less risky and, when comparing its historical volatility, Life Insurance is 84.3 times less risky than Sumeet Industries. The stock trades about -0.13 of its potential returns per unit of risk. The Sumeet Industries Limited is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  424.00  in Sumeet Industries Limited on September 30, 2024 and sell it today you would earn a total of  9,356  from holding Sumeet Industries Limited or generate 2206.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Life Insurance  vs.  Sumeet Industries Limited

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 latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Sumeet Industries

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sumeet Industries Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Sumeet Industries demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Life Insurance and Sumeet Industries

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

The idea behind Life Insurance and Sumeet Industries Limited 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.