Correlation Between TPL Insurance and Bank of Punjab

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Can any of the company-specific risk be diversified away by investing in both TPL Insurance and Bank of Punjab 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 TPL Insurance and Bank of Punjab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TPL Insurance and Bank of Punjab, you can compare the effects of market volatilities on TPL Insurance and Bank of Punjab 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 TPL Insurance with a short position of Bank of Punjab. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPL Insurance and Bank of Punjab.

Diversification Opportunities for TPL Insurance and Bank of Punjab

TPLBankDiversified AwayTPLBankDiversified Away100%
0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between TPL and Bank is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding TPL Insurance and Bank of Punjab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Punjab and TPL Insurance 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 TPL Insurance are associated (or correlated) with Bank of Punjab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Punjab has no effect on the direction of TPL Insurance i.e., TPL Insurance and Bank of Punjab go up and down completely randomly.

Pair Corralation between TPL Insurance and Bank of Punjab

Assuming the 90 days trading horizon TPL Insurance is expected to generate 6.68 times less return on investment than Bank of Punjab. But when comparing it to its historical volatility, TPL Insurance is 1.29 times less risky than Bank of Punjab. It trades about 0.05 of its potential returns per unit of risk. Bank of Punjab is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  550.00  in Bank of Punjab on October 26, 2024 and sell it today you would earn a total of  445.00  from holding Bank of Punjab or generate 80.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.39%
ValuesDaily Returns

TPL Insurance  vs.  Bank of Punjab

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 020406080100
JavaScript chart by amCharts 3.21.15TPLI BOP
       Timeline  
TPL Insurance 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in TPL Insurance are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, TPL Insurance may actually be approaching a critical reversion point that can send shares even higher in February 2025.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan910111213
Bank of Punjab 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Punjab are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Bank of Punjab reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan67891011

TPL Insurance and Bank of Punjab Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-10.0-7.49-4.98-2.470.04262.515.077.6210.18 0.0200.0250.0300.0350.040
JavaScript chart by amCharts 3.21.15TPLI BOP
       Returns  

Pair Trading with TPL Insurance and Bank of Punjab

The main advantage of trading using opposite TPL Insurance and Bank of Punjab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TPL Insurance position performs unexpectedly, Bank of Punjab 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 Bank of Punjab will offset losses from the drop in Bank of Punjab's long position.
The idea behind TPL Insurance and Bank of Punjab 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.
Check out your portfolio center.
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.

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