Correlation Between General Insurance and Indian Overseas
Can any of the company-specific risk be diversified away by investing in both General Insurance and Indian Overseas 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 Indian Overseas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Insurance and Indian Overseas Bank, you can compare the effects of market volatilities on General Insurance and Indian Overseas 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 Indian Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Insurance and Indian Overseas.
Diversification Opportunities for General Insurance and Indian Overseas
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between General and Indian is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding General Insurance and Indian Overseas Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indian Overseas 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 Indian Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indian Overseas Bank has no effect on the direction of General Insurance i.e., General Insurance and Indian Overseas go up and down completely randomly.
Pair Corralation between General Insurance and Indian Overseas
Assuming the 90 days trading horizon General Insurance is expected to generate 1.02 times more return on investment than Indian Overseas. However, General Insurance is 1.02 times more volatile than Indian Overseas Bank. It trades about 0.08 of its potential returns per unit of risk. Indian Overseas Bank is currently generating about 0.05 per unit of risk. If you would invest 16,454 in General Insurance on October 11, 2024 and sell it today you would earn a total of 28,216 from holding General Insurance or generate 171.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.39% |
| Values | Daily Returns |
General Insurance vs. Indian Overseas Bank
Performance |
| Timeline |
| General Insurance |
| Indian Overseas Bank |
General Insurance and Indian Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Insurance and Indian Overseas
The main advantage of trading using opposite General Insurance and Indian Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Insurance position performs unexpectedly, Indian Overseas 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 Indian Overseas will offset losses from the drop in Indian Overseas' long position.| General Insurance vs. Kingfa Science Technology | General Insurance vs. Rico Auto Industries | General Insurance vs. COSMO FIRST LIMITED | General Insurance vs. Delta Manufacturing Limited |
| Indian Overseas vs. State Bank of | Indian Overseas vs. The Federal Bank | Indian Overseas vs. Hybrid Financial Services | Indian Overseas vs. General Insurance |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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