Correlation Between WorldCall Telecom and Adamjee Insurance

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

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

Diversification Opportunities for WorldCall Telecom and Adamjee Insurance

0.91

Correlation Coefficient

WorldCall Telecom  Adamjee Insurance

Almost no diversification

The 3 months correlation between WorldCall and Adamjee is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding WorldCall Telecom and Adamjee Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adamjee Insurance and WorldCall Telecom 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 WorldCall Telecom are associated (or correlated) with Adamjee Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adamjee Insurance has no effect on the direction of WorldCall Telecom i.e., WorldCall Telecom and Adamjee Insurance go up and down completely randomly.

Pair Corralation between WorldCall Telecom and Adamjee Insurance

Assuming the 90 days trading horizon WorldCall Telecom is expected to under-perform the Adamjee Insurance. In addition to that, WorldCall Telecom is 1.66 times more volatile than Adamjee Insurance. It trades about -0.07 of its total potential returns per unit of risk. Adamjee Insurance is currently generating about -0.12 per unit of volatility. If you would invest  5,292  in Adamjee Insurance on October 15, 2024 and sell it today you would lose (395.00) from holding Adamjee Insurance or give up 7.46% of portfolio value over 90 days.

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

WorldCall Telecom  vs.  Adamjee Insurance

WorldCall Telecom

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WorldCall Telecom are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, WorldCall Telecom reported solid returns over the last few months and may actually be approaching a breakup point.

Adamjee Insurance

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Adamjee Insurance are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Adamjee Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WorldCall Telecom and Adamjee Insurance

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

The idea behind WorldCall Telecom and Adamjee 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.