Correlation Between Rojana Industrial and Charan Insurance

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

By analyzing existing cross correlation between Rojana Industrial Park and Charan Insurance Public, you can compare the effects of market volatilities on Rojana Industrial and Charan 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 Rojana Industrial with a short position of Charan Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rojana Industrial and Charan Insurance.

Diversification Opportunities for Rojana Industrial and Charan Insurance

0.79

Correlation Coefficient

Rojana Industrial  Charan Insurance

Poor diversification

The 3 months correlation between Rojana and Charan is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Rojana Industrial Park and Charan Insurance Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charan Insurance Public and Rojana Industrial 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 Rojana Industrial Park are associated (or correlated) with Charan Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charan Insurance Public has no effect on the direction of Rojana Industrial i.e., Rojana Industrial and Charan Insurance go up and down completely randomly.

Pair Corralation between Rojana Industrial and Charan Insurance

Assuming the 90 days trading horizon Rojana Industrial Park is expected to under-perform the Charan Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Rojana Industrial Park is 1.57 times less risky than Charan Insurance. The stock trades about -0.17 of its potential returns per unit of risk. The Charan Insurance Public is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  2,210  in Charan Insurance Public on October 27, 2024 and sell it today you would lose (210.00) from holding Charan Insurance Public or give up 9.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Rojana Industrial Park  vs.  Charan Insurance Public

Rojana Industrial Park

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rojana Industrial Park has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers 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.

Charan Insurance Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charan Insurance Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting 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.

Pair Trading with Rojana Industrial and Charan Insurance

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

The idea behind Rojana Industrial Park and Charan Insurance Public 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.