Correlation Between Premier Insurance and Data Agro

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

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

Diversification Opportunities for Premier Insurance and Data Agro

0.29

Correlation Coefficient

Premier Insurance  Data Agro

Modest diversification

The 3 months correlation between Premier and Data is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Premier Insurance and Data Agro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Agro 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 Data Agro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Agro has no effect on the direction of Premier Insurance i.e., Premier Insurance and Data Agro go up and down completely randomly.

Pair Corralation between Premier Insurance and Data Agro

Assuming the 90 days trading horizon Premier Insurance is expected to under-perform the Data Agro. But the stock apears to be less risky and, when comparing its historical volatility, Premier Insurance is 1.15 times less risky than Data Agro. The stock trades about -0.02 of its potential returns per unit of risk. The Data Agro is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  10,058  in Data Agro on September 16, 2024 and sell it today you would earn a total of  403.00  from holding Data Agro or generate 4.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	78.46%
Values	Daily Returns

Premier Insurance  vs.  Data Agro

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.

Data Agro

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Data Agro are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Data Agro may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Premier Insurance and Data Agro

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

The idea behind Premier Insurance and Data Agro 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.