Correlation Between Life Insurance and Electronics Mart
Can any of the company-specific risk be diversified away by investing in both Life Insurance and Electronics Mart 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 Life Insurance and Electronics Mart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Life Insurance and Electronics Mart India, you can compare the effects of market volatilities on Life Insurance and Electronics Mart 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 Life Insurance with a short position of Electronics Mart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Insurance and Electronics Mart.
Diversification Opportunities for Life Insurance and Electronics Mart
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Life and Electronics is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Life Insurance and Electronics Mart India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronics Mart India and Life 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 Life Insurance are associated (or correlated) with Electronics Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronics Mart India has no effect on the direction of Life Insurance i.e., Life Insurance and Electronics Mart go up and down completely randomly.
Pair Corralation between Life Insurance and Electronics Mart
Assuming the 90 days trading horizon Life Insurance is expected to generate 0.88 times more return on investment than Electronics Mart. However, Life Insurance is 1.13 times less risky than Electronics Mart. It trades about -0.15 of its potential returns per unit of risk. Electronics Mart India is currently generating about -0.22 per unit of risk. If you would invest 90,235 in Life Insurance on November 3, 2024 and sell it today you would lose (5,690) from holding Life Insurance or give up 6.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Life Insurance vs. Electronics Mart India
Performance |
| Timeline |
| Life Insurance |
| Electronics Mart India |
Life Insurance and Electronics Mart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Insurance and Electronics Mart
The main advantage of trading using opposite Life Insurance and Electronics Mart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Insurance position performs unexpectedly, Electronics Mart 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 Electronics Mart will offset losses from the drop in Electronics Mart's long position.| Life Insurance vs. Indo Rama Synthetics | Life Insurance vs. UTI Asset Management | Life Insurance vs. Rajnandini Metal Limited | Life Insurance vs. IOL Chemicals and |
| Electronics Mart vs. Dhunseri Investments Limited | Electronics Mart vs. Bajaj Holdings Investment | Electronics Mart vs. Kewal Kiran Clothing | Electronics Mart vs. VIP Clothing Limited |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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