Correlation Between General Insurance and City Union
Can any of the company-specific risk be diversified away by investing in both General Insurance and City Union 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 General Insurance and City Union into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Insurance and City Union Bank, you can compare the effects of market volatilities on General Insurance and City Union 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 General Insurance with a short position of City Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Insurance and City Union.
Diversification Opportunities for General Insurance and City Union
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between General and City is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding General Insurance and City Union Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Union Bank and General 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 General Insurance are associated (or correlated) with City Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Union Bank has no effect on the direction of General Insurance i.e., General Insurance and City Union go up and down completely randomly.
Pair Corralation between General Insurance and City Union
Assuming the 90 days trading horizon General Insurance is expected to generate 1.54 times more return on investment than City Union. However, General Insurance is 1.54 times more volatile than City Union Bank. It trades about -0.02 of its potential returns per unit of risk. City Union Bank is currently generating about -0.22 per unit of risk. If you would invest 39,900 in General Insurance on November 28, 2024 and sell it today you would lose (765.00) from holding General Insurance or give up 1.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Insurance vs. City Union Bank
Performance |
| Timeline |
| General Insurance |
| City Union Bank |
General Insurance and City Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Insurance and City Union
The main advantage of trading using opposite General Insurance and City Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Insurance position performs unexpectedly, City Union 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 City Union will offset losses from the drop in City Union's long position.| General Insurance vs. CREDITACCESS GRAMEEN LIMITED | General Insurance vs. KNR Constructions Limited | General Insurance vs. RBL Bank Limited | General Insurance vs. Clean Science and |
| City Union vs. Manaksia Coated Metals | City Union vs. Agarwal Industrial | City Union vs. Akums Drugs and | City Union vs. Popular Vehicles and |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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