Correlation Between Premier Insurance and Bawany Air

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

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

Diversification Opportunities for Premier Insurance and Bawany Air

-0.14

Correlation Coefficient

Premier Insurance  Bawany Air

Good diversification

The 3 months correlation between Premier and Bawany is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Premier Insurance and Bawany Air Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bawany Air Products and Premier 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 Premier Insurance are associated (or correlated) with Bawany Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bawany Air Products has no effect on the direction of Premier Insurance i.e., Premier Insurance and Bawany Air go up and down completely randomly.

Pair Corralation between Premier Insurance and Bawany Air

Assuming the 90 days trading horizon Premier Insurance is expected to under-perform the Bawany Air. But the stock apears to be less risky and, when comparing its historical volatility, Premier Insurance is 1.28 times less risky than Bawany Air. The stock trades about -0.05 of its potential returns per unit of risk. The Bawany Air Products is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,293  in Bawany Air Products on October 25, 2024 and sell it today you would earn a total of  187.00  from holding Bawany Air Products or generate 5.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.55%
Values	Daily Returns

Premier Insurance  vs.  Bawany Air Products

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Bawany Air Products

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bawany Air Products are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Bawany Air may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Premier Insurance and Bawany Air

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

The idea behind Premier Insurance and Bawany Air Products 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.