Correlation Between International Steels and TPL Insurance
Can any of the company-specific risk be diversified away by investing in both International Steels 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 International Steels and TPL Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Steels and TPL Insurance, you can compare the effects of market volatilities on International Steels 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 International Steels with a short position of TPL Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Steels and TPL Insurance.
Diversification Opportunities for International Steels and TPL Insurance
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and TPL is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding International Steels and TPL Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPL Insurance and International Steels 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 International Steels 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 International Steels i.e., International Steels and TPL Insurance go up and down completely randomly.
Pair Corralation between International Steels and TPL Insurance
Assuming the 90 days trading horizon International Steels is expected to under-perform the TPL Insurance. But the stock apears to be less risky and, when comparing its historical volatility, International Steels is 1.45 times less risky than TPL Insurance. The stock trades about -0.5 of its potential returns per unit of risk. The TPL Insurance is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest 1,100 in TPL Insurance on November 4, 2024 and sell it today you would lose (108.00) from holding TPL Insurance or give up 9.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
International Steels vs. TPL Insurance
Performance |
| Timeline |
| International Steels |
| TPL Insurance |
International Steels and TPL Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Steels and TPL Insurance
The main advantage of trading using opposite International Steels and TPL Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Steels 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.| International Steels vs. Allied Bank | International Steels vs. MCB Bank | International Steels vs. Dost Steels | International Steels vs. Crescent Star Insurance |
| TPL Insurance vs. National Foods | TPL Insurance vs. Unity Foods | TPL Insurance vs. Pakistan Synthetics | TPL Insurance vs. Ghani Chemical Industries |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |