Correlation Between MRF and General Insuranceof
Can any of the company-specific risk be diversified away by investing in both MRF and General Insuranceof 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 MRF and General Insuranceof into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MRF Limited and General Insurance, you can compare the effects of market volatilities on MRF and General Insuranceof 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 MRF with a short position of General Insuranceof. Check out your portfolio center. Please also check ongoing floating volatility patterns of MRF and General Insuranceof.
Diversification Opportunities for MRF and General Insuranceof
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MRF and General is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding MRF Limited and General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Insuranceof and MRF 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 MRF Limited are associated (or correlated) with General Insuranceof. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Insuranceof has no effect on the direction of MRF i.e., MRF and General Insuranceof go up and down completely randomly.
Pair Corralation between MRF and General Insuranceof
Assuming the 90 days trading horizon MRF is expected to generate 10.37 times less return on investment than General Insuranceof. But when comparing it to its historical volatility, MRF Limited is 1.93 times less risky than General Insuranceof. It trades about 0.04 of its potential returns per unit of risk. General Insurance is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 36,030 in General Insurance on August 29, 2024 and sell it today you would earn a total of 3,795 from holding General Insurance or generate 10.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MRF Limited vs. General Insurance
Performance |
| Timeline |
| MRF Limited |
| General Insuranceof |
MRF and General Insuranceof Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MRF and General Insuranceof
The main advantage of trading using opposite MRF and General Insuranceof positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MRF position performs unexpectedly, General Insuranceof 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 General Insuranceof will offset losses from the drop in General Insuranceof's long position.| MRF vs. Baazar Style Retail | MRF vs. BF Utilities Limited | MRF vs. GM Breweries Limited | MRF vs. United Breweries Limited |
| General Insuranceof vs. MRF Limited | General Insuranceof vs. Nalwa Sons Investments | General Insuranceof vs. Kalyani Investment | General Insuranceof vs. Pilani Investment and |
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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