Correlation Between Grays Leasing and Century Insurance
Can any of the company-specific risk be diversified away by investing in both Grays Leasing and Century 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 Grays Leasing and Century Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grays Leasing and Century Insurance, you can compare the effects of market volatilities on Grays Leasing and Century 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 Grays Leasing with a short position of Century Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grays Leasing and Century Insurance.
Diversification Opportunities for Grays Leasing and Century Insurance
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Grays and Century is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Grays Leasing and Century Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Insurance and Grays Leasing 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 Grays Leasing are associated (or correlated) with Century Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Insurance has no effect on the direction of Grays Leasing i.e., Grays Leasing and Century Insurance go up and down completely randomly.
Pair Corralation between Grays Leasing and Century Insurance
Assuming the 90 days trading horizon Grays Leasing is expected to under-perform the Century Insurance. In addition to that, Grays Leasing is 1.74 times more volatile than Century Insurance. It trades about -0.11 of its total potential returns per unit of risk. Century Insurance is currently generating about 0.31 per unit of volatility. If you would invest 3,899 in Century Insurance on November 29, 2024 and sell it today you would earn a total of 621.00 from holding Century Insurance or generate 15.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Grays Leasing vs. Century Insurance
Performance |
| Timeline |
| Grays Leasing |
| Century Insurance |
Grays Leasing and Century Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grays Leasing and Century Insurance
The main advantage of trading using opposite Grays Leasing and Century Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grays Leasing position performs unexpectedly, Century 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 Century Insurance will offset losses from the drop in Century Insurance's long position.| Grays Leasing vs. Askari General Insurance | Grays Leasing vs. Orient Rental Modaraba | Grays Leasing vs. NetSol Technologies | Grays Leasing vs. Unilever Pakistan Foods |
| Century Insurance vs. Faysal Bank | Century Insurance vs. IBL HealthCare | Century Insurance vs. Adamjee Insurance | Century Insurance vs. Reliance Insurance Co |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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