Correlation Between IBL HealthCare and TPL Insurance
Can any of the company-specific risk be diversified away by investing in both IBL HealthCare and TPL 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 IBL HealthCare and TPL Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IBL HealthCare and TPL Insurance, you can compare the effects of market volatilities on IBL HealthCare and TPL 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 IBL HealthCare with a short position of TPL Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of IBL HealthCare and TPL Insurance.
Diversification Opportunities for IBL HealthCare and TPL Insurance
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between IBL and TPL is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding IBL HealthCare and TPL Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPL Insurance and IBL HealthCare 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 IBL HealthCare are associated (or correlated) with TPL Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPL Insurance has no effect on the direction of IBL HealthCare i.e., IBL HealthCare and TPL Insurance go up and down completely randomly.
Pair Corralation between IBL HealthCare and TPL Insurance
Assuming the 90 days trading horizon IBL HealthCare is expected to generate 1.12 times more return on investment than TPL Insurance. However, IBL HealthCare is 1.12 times more volatile than TPL Insurance. It trades about 0.15 of its potential returns per unit of risk. TPL Insurance is currently generating about 0.01 per unit of risk. If you would invest 3,181 in IBL HealthCare on September 12, 2024 and sell it today you would earn a total of 1,161 from holding IBL HealthCare or generate 36.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
IBL HealthCare vs. TPL Insurance
Performance |
| Timeline |
| IBL HealthCare |
| TPL Insurance |
IBL HealthCare and TPL Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IBL HealthCare and TPL Insurance
The main advantage of trading using opposite IBL HealthCare and TPL Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IBL HealthCare position performs unexpectedly, TPL 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 TPL Insurance will offset losses from the drop in TPL Insurance's long position.| IBL HealthCare vs. Masood Textile Mills | IBL HealthCare vs. Fauji Foods | IBL HealthCare vs. KSB Pumps | IBL HealthCare vs. Mari Petroleum |
| TPL Insurance vs. Masood Textile Mills | TPL Insurance vs. Fauji Foods | TPL Insurance vs. KSB Pumps | TPL Insurance vs. Mari Petroleum |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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