Correlation Between Premier Insurance and Fateh Sports

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

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

Diversification Opportunities for Premier Insurance and Fateh Sports

0.25

Correlation Coefficient

Premier Insurance  Fateh Sports

Modest diversification

The 3 months correlation between Premier and Fateh is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Premier Insurance and Fateh Sports Wear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fateh Sports Wear 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 Fateh Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fateh Sports Wear has no effect on the direction of Premier Insurance i.e., Premier Insurance and Fateh Sports go up and down completely randomly.

Pair Corralation between Premier Insurance and Fateh Sports

Assuming the 90 days trading horizon Premier Insurance is expected to generate 3.55 times less return on investment than Fateh Sports. In addition to that, Premier Insurance is 1.18 times more volatile than Fateh Sports Wear. It trades about 0.02 of its total potential returns per unit of risk. Fateh Sports Wear is currently generating about 0.08 per unit of volatility. If you would invest  6,248  in Fateh Sports Wear on October 11, 2024 and sell it today you would earn a total of  1,609  from holding Fateh Sports Wear or generate 25.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	22.12%
Values	Daily Returns

Premier Insurance  vs.  Fateh Sports Wear

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.

Fateh Sports Wear

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fateh Sports Wear has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Premier Insurance and Fateh Sports

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

The idea behind Premier Insurance and Fateh Sports Wear 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.