Correlation Between General Insurance and Credo Brands
Can any of the company-specific risk be diversified away by investing in both General Insurance and Credo Brands 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 Credo Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Insurance and Credo Brands Marketing, you can compare the effects of market volatilities on General Insurance and Credo Brands 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 Credo Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Insurance and Credo Brands.
Diversification Opportunities for General Insurance and Credo Brands
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between General and Credo is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding General Insurance and Credo Brands Marketing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credo Brands Marketing 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 Credo Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credo Brands Marketing has no effect on the direction of General Insurance i.e., General Insurance and Credo Brands go up and down completely randomly.
Pair Corralation between General Insurance and Credo Brands
Assuming the 90 days trading horizon General Insurance is expected to generate 0.84 times more return on investment than Credo Brands. However, General Insurance is 1.19 times less risky than Credo Brands. It trades about 0.02 of its potential returns per unit of risk. Credo Brands Marketing is currently generating about -0.02 per unit of risk. If you would invest 38,221 in General Insurance on September 1, 2024 and sell it today you would earn a total of 1,739 from holding General Insurance or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Insurance vs. Credo Brands Marketing
Performance |
| Timeline |
| General Insurance |
| Credo Brands Marketing |
General Insurance and Credo Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Insurance and Credo Brands
The main advantage of trading using opposite General Insurance and Credo Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Insurance position performs unexpectedly, Credo Brands 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 Credo Brands will offset losses from the drop in Credo Brands' long position.| General Insurance vs. R S Software | General Insurance vs. Newgen Software Technologies | General Insurance vs. LT Foods Limited | General Insurance vs. Ami Organics Limited |
| Credo Brands vs. ICICI Bank Limited | Credo Brands vs. General Insurance | Credo Brands vs. Hybrid Financial Services | Credo Brands vs. Bank of Maharashtra |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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