Correlation Between Life Insurance and Tilaknagar Industries

Can any of the company-specific risk be diversified away by investing in both Life Insurance and Tilaknagar 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 Tilaknagar 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 Tilaknagar Industries Limited, you can compare the effects of market volatilities on Life Insurance and Tilaknagar 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 Tilaknagar Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Insurance and Tilaknagar Industries.

Diversification Opportunities for Life Insurance and Tilaknagar Industries

-0.15

Correlation Coefficient

Life Insurance  Tilaknagar Industries

Good diversification

The 3 months correlation between Life and Tilaknagar is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Life Insurance and Tilaknagar Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tilaknagar 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 Tilaknagar Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tilaknagar Industries has no effect on the direction of Life Insurance i.e., Life Insurance and Tilaknagar Industries go up and down completely randomly.

Pair Corralation between Life Insurance and Tilaknagar Industries

Assuming the 90 days trading horizon Life Insurance is expected to under-perform the Tilaknagar Industries. But the stock apears to be less risky and, when comparing its historical volatility, Life Insurance is 2.13 times less risky than Tilaknagar Industries. The stock trades about -0.29 of its potential returns per unit of risk. The Tilaknagar Industries Limited is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  39,675  in Tilaknagar Industries Limited on October 5, 2024 and sell it today you would earn a total of  5,720  from holding Tilaknagar Industries Limited or generate 14.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Life Insurance  vs.  Tilaknagar 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 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.

Tilaknagar Industries

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tilaknagar Industries Limited are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Tilaknagar Industries exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Life Insurance and Tilaknagar Industries

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

The idea behind Life Insurance and Tilaknagar 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.