Correlation Between Tangerine Beach and Janashakthi Insurance

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

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

Diversification Opportunities for Tangerine Beach and Janashakthi Insurance

0.58

Correlation Coefficient

Tangerine Beach  Janashakthi Insurance

Very weak diversification

The 3 months correlation between Tangerine and Janashakthi is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Tangerine Beach Hotels and Janashakthi Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janashakthi Insurance and Tangerine Beach 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 Tangerine Beach Hotels are associated (or correlated) with Janashakthi Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janashakthi Insurance has no effect on the direction of Tangerine Beach i.e., Tangerine Beach and Janashakthi Insurance go up and down completely randomly.

Pair Corralation between Tangerine Beach and Janashakthi Insurance

Assuming the 90 days trading horizon Tangerine Beach Hotels is expected to under-perform the Janashakthi Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Tangerine Beach Hotels is 1.28 times less risky than Janashakthi Insurance. The stock trades about -0.46 of its potential returns per unit of risk. The Janashakthi Insurance is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  6,410  in Janashakthi Insurance on December 4, 2024 and sell it today you would earn a total of  390.00  from holding Janashakthi Insurance or generate 6.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

Tangerine Beach Hotels  vs.  Janashakthi Insurance

Tangerine Beach Hotels

Risk-Adjusted Performance

Weak

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

Janashakthi Insurance

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Janashakthi Insurance are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Janashakthi Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tangerine Beach and Janashakthi Insurance

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

The idea behind Tangerine Beach Hotels and Janashakthi 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.