Correlation Between Life Insurance and TATA SUMER

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Can any of the company-specific risk be diversified away by investing in both Life Insurance and TATA SUMER 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 TATA SUMER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Life Insurance and TATA SUMER PRODUCTS, you can compare the effects of market volatilities on Life Insurance and TATA SUMER 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 TATA SUMER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Insurance and TATA SUMER.

Diversification Opportunities for Life Insurance and TATA SUMER

0.89
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Life and TATA is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Life Insurance and TATA SUMER PRODUCTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TATA SUMER PRODUCTS 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 TATA SUMER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TATA SUMER PRODUCTS has no effect on the direction of Life Insurance i.e., Life Insurance and TATA SUMER go up and down completely randomly.

Pair Corralation between Life Insurance and TATA SUMER

Assuming the 90 days trading horizon Life Insurance is expected to generate 1.54 times more return on investment than TATA SUMER. However, Life Insurance is 1.54 times more volatile than TATA SUMER PRODUCTS. It trades about 0.05 of its potential returns per unit of risk. TATA SUMER PRODUCTS is currently generating about 0.01 per unit of risk. If you would invest  77,820  in Life Insurance on September 2, 2024 and sell it today you would earn a total of  20,730  from holding Life Insurance or generate 26.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy99.18%
ValuesDaily Returns

Life Insurance  vs.  TATA SUMER PRODUCTS

 Performance 
       Timeline  
Life Insurance 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Life Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
TATA SUMER PRODUCTS 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days TATA SUMER PRODUCTS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Life Insurance and TATA SUMER Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Life Insurance and TATA SUMER

The main advantage of trading using opposite Life Insurance and TATA SUMER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Insurance position performs unexpectedly, TATA SUMER 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 TATA SUMER will offset losses from the drop in TATA SUMER's long position.
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The idea behind Life Insurance and TATA SUMER PRODUCTS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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