Correlation Between Mangalore Chemicals and Life Insurance

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

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

Diversification Opportunities for Mangalore Chemicals and Life Insurance

-0.02

Correlation Coefficient

Mangalore Chemicals  Life Insurance

Good diversification

The 3 months correlation between Mangalore and Life is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Mangalore Chemicals Fertilizer and Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Insurance and Mangalore Chemicals 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 Mangalore Chemicals Fertilizers are associated (or correlated) with Life Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Insurance has no effect on the direction of Mangalore Chemicals i.e., Mangalore Chemicals and Life Insurance go up and down completely randomly.

Pair Corralation between Mangalore Chemicals and Life Insurance

Assuming the 90 days trading horizon Mangalore Chemicals Fertilizers is expected to generate 1.28 times more return on investment than Life Insurance. However, Mangalore Chemicals is 1.28 times more volatile than Life Insurance. It trades about 0.06 of its potential returns per unit of risk. Life Insurance is currently generating about 0.06 per unit of risk. If you would invest  9,176  in Mangalore Chemicals Fertilizers on October 5, 2024 and sell it today you would earn a total of  7,060  from holding Mangalore Chemicals Fertilizers or generate 76.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.33%
Values	Daily Returns

Mangalore Chemicals Fertilizer  vs.  Life Insurance

Mangalore Chemicals

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mangalore Chemicals Fertilizers are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Mangalore Chemicals exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Mangalore Chemicals and Life Insurance

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

The idea behind Mangalore Chemicals Fertilizers and Life 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.