Correlation Between Loads and Shaheen Insurance

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

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

Diversification Opportunities for Loads and Shaheen Insurance

0.89

Correlation Coefficient

Loads  Shaheen Insurance

Very poor diversification

The 3 months correlation between Loads and Shaheen is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Loads and Shaheen Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaheen 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 Shaheen Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaheen Insurance has no effect on the direction of Loads i.e., Loads and Shaheen Insurance go up and down completely randomly.

Pair Corralation between Loads and Shaheen Insurance

Assuming the 90 days trading horizon Loads is expected to generate 1.14 times more return on investment than Shaheen Insurance. However, Loads is 1.14 times more volatile than Shaheen Insurance. It trades about 0.23 of its potential returns per unit of risk. Shaheen Insurance is currently generating about 0.16 per unit of risk. If you would invest  1,028  in Loads on September 14, 2024 and sell it today you would earn a total of  561.00  from holding Loads or generate 54.57% return on investment over 90 days.

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

Loads  vs.  Shaheen Insurance

Loads

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Loads are ranked lower than 17 (%) 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.

Shaheen Insurance

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shaheen Insurance are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shaheen Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Loads and Shaheen Insurance

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

The idea behind Loads and Shaheen 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.