Correlation Between State Tradingof and General Insurance

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

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

Diversification Opportunities for State Tradingof and General Insurance

0.78

Correlation Coefficient

State Tradingof  General Insurance

Poor diversification

The 3 months correlation between State and General is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding The State Trading and General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Insurance and State Tradingof 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 The State Trading 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 State Tradingof i.e., State Tradingof and General Insurance go up and down completely randomly.

Pair Corralation between State Tradingof and General Insurance

Assuming the 90 days trading horizon The State Trading is expected to under-perform the General Insurance. But the stock apears to be less risky and, when comparing its historical volatility, The State Trading is 1.09 times less risky than General Insurance. The stock trades about -0.13 of its potential returns per unit of risk. The General Insurance is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  46,545  in General Insurance on December 26, 2024 and sell it today you would lose (3,810) from holding General Insurance or give up 8.19% of portfolio value over 90 days.

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

The State Trading  vs.  General Insurance

State Tradingof

Risk-Adjusted Performance

Very Weak

Over the last 90 days The State Trading 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 indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

General Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days General Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, General Insurance is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with State Tradingof and General Insurance

The main advantage of trading using opposite State Tradingof and General Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Tradingof 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 The State Trading 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.