Correlation Between Premier Insurance and Century Insurance
Can any of the company-specific risk be diversified away by investing in both Premier Insurance and Century Insurance 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 Century Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premier Insurance and Century Insurance, you can compare the effects of market volatilities on Premier Insurance and Century 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 Premier Insurance with a short position of Century Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Insurance and Century Insurance.
Diversification Opportunities for Premier Insurance and Century Insurance
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Premier and Century is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Premier Insurance and Century Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Insurance 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 Century Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Insurance has no effect on the direction of Premier Insurance i.e., Premier Insurance and Century Insurance go up and down completely randomly.
Pair Corralation between Premier Insurance and Century Insurance
Assuming the 90 days trading horizon Premier Insurance is expected to generate 11.37 times less return on investment than Century Insurance. In addition to that, Premier Insurance is 2.67 times more volatile than Century Insurance. It trades about 0.0 of its total potential returns per unit of risk. Century Insurance is currently generating about 0.08 per unit of volatility. If you would invest 3,803 in Century Insurance on November 9, 2024 and sell it today you would earn a total of 47.00 from holding Century Insurance or generate 1.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premier Insurance vs. Century Insurance
Performance |
| Timeline |
| Premier Insurance |
| Century Insurance |
Premier Insurance and Century Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Insurance and Century Insurance
The main advantage of trading using opposite Premier Insurance and Century Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Insurance position performs unexpectedly, Century 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 Century Insurance will offset losses from the drop in Century Insurance's long position.| Premier Insurance vs. Engro Polymer Chemicals | Premier Insurance vs. Murree Brewery | Premier Insurance vs. Unilever Pakistan Foods | Premier Insurance vs. NetSol Technologies |
| Century Insurance vs. Hi Tech Lubricants | Century Insurance vs. Quice Food Industries | Century Insurance vs. EFU General Insurance | Century Insurance vs. Universal Insurance |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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