Correlation Between Loads and Premier Insurance

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

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

Diversification Opportunities for Loads and Premier Insurance

-0.53

Correlation Coefficient

Loads  Premier Insurance

Excellent diversification

The 3 months correlation between Loads and Premier is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Loads and Premier Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Insurance and Loads 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 Loads are associated (or correlated) with Premier Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Insurance has no effect on the direction of Loads i.e., Loads and Premier Insurance go up and down completely randomly.

Pair Corralation between Loads and Premier Insurance

Assuming the 90 days trading horizon Loads is expected to generate 0.62 times more return on investment than Premier Insurance. However, Loads is 1.61 times less risky than Premier Insurance. It trades about 0.07 of its potential returns per unit of risk. Premier Insurance is currently generating about 0.01 per unit of risk. If you would invest  948.00  in Loads on September 14, 2024 and sell it today you would earn a total of  607.00  from holding Loads or generate 64.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	74.52%
Values	Daily Returns

Loads  vs.  Premier Insurance

Loads

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Loads are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Loads disclosed solid returns over the last few months and may actually be approaching a breakup point.

Premier Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Premier Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Premier Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Loads and Premier Insurance

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

The idea behind Loads and Premier 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.