Correlation Between Spentex Industries and General Insurance

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

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

Diversification Opportunities for Spentex Industries and General Insurance

0.0

Correlation Coefficient

Spentex Industries  General Insurance

Pay attention - limited upside

The 3 months correlation between Spentex and General is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Spentex Industries Limited and General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Insurance and Spentex Industries 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 Spentex Industries Limited are associated (or correlated) with General Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Insurance has no effect on the direction of Spentex Industries i.e., Spentex Industries and General Insurance go up and down completely randomly.

Pair Corralation between Spentex Industries and General Insurance

If you would invest  36,315  in General Insurance on October 7, 2024 and sell it today you would earn a total of  9,455  from holding General Insurance or generate 26.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Spentex Industries Limited  vs.  General Insurance

Spentex Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spentex Industries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Spentex Industries is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

General Insurance

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in General Insurance are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental indicators, General Insurance displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spentex Industries and General Insurance

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

The idea behind Spentex Industries Limited and General 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.