Correlation Between TPL Insurance and Roshan Packages

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

By analyzing existing cross correlation between TPL Insurance and Roshan Packages, you can compare the effects of market volatilities on TPL Insurance and Roshan Packages 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 Roshan Packages. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPL Insurance and Roshan Packages.

Diversification Opportunities for TPL Insurance and Roshan Packages

0.64

Correlation Coefficient

TPL Insurance  Roshan Packages

Poor diversification

The 3 months correlation between TPL and Roshan is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding TPL Insurance and Roshan Packages in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roshan Packages 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 Roshan Packages. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roshan Packages has no effect on the direction of TPL Insurance i.e., TPL Insurance and Roshan Packages go up and down completely randomly.

Pair Corralation between TPL Insurance and Roshan Packages

Assuming the 90 days trading horizon TPL Insurance is expected to under-perform the Roshan Packages. In addition to that, TPL Insurance is 1.1 times more volatile than Roshan Packages. It trades about -0.09 of its total potential returns per unit of risk. Roshan Packages is currently generating about -0.09 per unit of volatility. If you would invest  1,792  in Roshan Packages on December 20, 2024 and sell it today you would lose (230.00) from holding Roshan Packages or give up 12.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

TPL Insurance  vs.  Roshan Packages

TPL Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days TPL Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Roshan Packages

Risk-Adjusted Performance

Very Weak

Over the last 90 days Roshan Packages has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with TPL Insurance and Roshan Packages

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

The idea behind TPL Insurance and Roshan Packages 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.