Correlation Between Hi Tech and Adamjee Insurance
Can any of the company-specific risk be diversified away by investing in both Hi Tech 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 Hi Tech and Adamjee Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hi Tech Lubricants and Adamjee Insurance, you can compare the effects of market volatilities on Hi Tech 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 Hi Tech with a short position of Adamjee Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hi Tech and Adamjee Insurance.
Diversification Opportunities for Hi Tech and Adamjee Insurance
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between HTL and Adamjee is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Hi Tech Lubricants and Adamjee Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adamjee Insurance and Hi Tech 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 Hi Tech Lubricants 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 Hi Tech i.e., Hi Tech and Adamjee Insurance go up and down completely randomly.
Pair Corralation between Hi Tech and Adamjee Insurance
Assuming the 90 days trading horizon Hi Tech Lubricants is expected to under-perform the Adamjee Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Hi Tech Lubricants is 1.18 times less risky than Adamjee Insurance. The stock trades about -0.12 of its potential returns per unit of risk. The Adamjee Insurance is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,912 in Adamjee Insurance on October 26, 2024 and sell it today you would earn a total of 139.00 from holding Adamjee Insurance or generate 2.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hi Tech Lubricants vs. Adamjee Insurance
Performance |
| Timeline |
| Hi Tech Lubricants |
| Adamjee Insurance |
Hi Tech and Adamjee Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hi Tech and Adamjee Insurance
The main advantage of trading using opposite Hi Tech and Adamjee Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hi Tech 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.| Hi Tech vs. Reliance Insurance Co | Hi Tech vs. Soneri Bank | Hi Tech vs. TPL Insurance | Hi Tech vs. Adamjee Insurance |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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