Correlation Between Synthetic Products and Adamjee Insurance

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

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

Diversification Opportunities for Synthetic Products and Adamjee Insurance

0.48

Correlation Coefficient

Synthetic Products  Adamjee Insurance

Very weak diversification

The 3 months correlation between Synthetic and Adamjee is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Synthetic Products Enterprises and Adamjee Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adamjee Insurance and Synthetic Products 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 Synthetic Products Enterprises are associated (or correlated) with Adamjee Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adamjee Insurance has no effect on the direction of Synthetic Products i.e., Synthetic Products and Adamjee Insurance go up and down completely randomly.

Pair Corralation between Synthetic Products and Adamjee Insurance

Assuming the 90 days trading horizon Synthetic Products is expected to generate 7.89 times less return on investment than Adamjee Insurance. In addition to that, Synthetic Products is 1.22 times more volatile than Adamjee Insurance. It trades about 0.02 of its total potential returns per unit of risk. Adamjee Insurance is currently generating about 0.2 per unit of volatility. If you would invest  3,435  in Adamjee Insurance on October 20, 2024 and sell it today you would earn a total of  1,682  from holding Adamjee Insurance or generate 48.97% return on investment over 90 days.

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

Synthetic Products Enterprises  vs.  Adamjee Insurance

Synthetic Products

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Synthetic Products Enterprises are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Synthetic Products is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Adamjee Insurance

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Adamjee Insurance are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Adamjee Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Synthetic Products and Adamjee Insurance

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

The idea behind Synthetic Products Enterprises and Adamjee 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.