Correlation Between Paramount Communications and General Insurance
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By analyzing existing cross correlation between Paramount Communications Limited and General Insurance, you can compare the effects of market volatilities on Paramount Communications and General 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 Paramount Communications with a short position of General Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paramount Communications and General Insurance.
Diversification Opportunities for Paramount Communications and General Insurance
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Paramount and General is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Paramount Communications Limit and General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Insurance and Paramount Communications 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 Paramount Communications Limited are associated (or correlated) with General Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Insurance has no effect on the direction of Paramount Communications i.e., Paramount Communications and General Insurance go up and down completely randomly.
Pair Corralation between Paramount Communications and General Insurance
Assuming the 90 days trading horizon Paramount Communications Limited is expected to generate 0.98 times more return on investment than General Insurance. However, Paramount Communications Limited is 1.02 times less risky than General Insurance. It trades about 0.09 of its potential returns per unit of risk. General Insurance is currently generating about 0.08 per unit of risk. If you would invest 2,235 in Paramount Communications Limited on August 31, 2024 and sell it today you would earn a total of 4,873 from holding Paramount Communications Limited or generate 218.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Paramount Communications Limit vs. General Insurance
Performance |
| Timeline |
| Paramount Communications |
| General Insurance |
Paramount Communications and General Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paramount Communications and General Insurance
The main advantage of trading using opposite Paramount Communications and General Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paramount Communications position performs unexpectedly, General 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 General Insurance will offset losses from the drop in General Insurance's long position.The idea behind Paramount Communications Limited and General Insurance 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.
| General Insurance vs. Ortel Communications Limited | General Insurance vs. Paramount Communications Limited | General Insurance vs. TVS Electronics Limited | General Insurance vs. Elin Electronics 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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