Correlation Between Premier Insurance and Agritech
Can any of the company-specific risk be diversified away by investing in both Premier Insurance and Agritech 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 Premier Insurance and Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premier Insurance and Agritech, you can compare the effects of market volatilities on Premier Insurance and Agritech 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 Premier Insurance with a short position of Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Insurance and Agritech.
Diversification Opportunities for Premier Insurance and Agritech
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Premier and Agritech is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Premier Insurance and Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agritech and Premier 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 Premier Insurance are associated (or correlated) with Agritech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agritech has no effect on the direction of Premier Insurance i.e., Premier Insurance and Agritech go up and down completely randomly.
Pair Corralation between Premier Insurance and Agritech
Assuming the 90 days trading horizon Premier Insurance is expected to under-perform the Agritech. In addition to that, Premier Insurance is 2.56 times more volatile than Agritech. It trades about -0.09 of its total potential returns per unit of risk. Agritech is currently generating about 0.18 per unit of volatility. If you would invest 3,714 in Agritech on August 28, 2024 and sell it today you would earn a total of 244.00 from holding Agritech or generate 6.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 80.95% |
| Values | Daily Returns |
Premier Insurance vs. Agritech
Performance |
| Timeline |
| Premier Insurance |
| Agritech |
Premier Insurance and Agritech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Insurance and Agritech
The main advantage of trading using opposite Premier Insurance and Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Insurance position performs unexpectedly, Agritech 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 Agritech will offset losses from the drop in Agritech's long position.| Premier Insurance vs. Habib Bank | Premier Insurance vs. National Bank of | Premier Insurance vs. United Bank | Premier Insurance vs. MCB Bank |
| Agritech vs. Masood Textile Mills | Agritech vs. Fauji Foods | Agritech vs. KSB Pumps | Agritech vs. Mari Petroleum |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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