Correlation Between Premier Insurance and Grays Leasing
Can any of the company-specific risk be diversified away by investing in both Premier Insurance and Grays Leasing 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 Grays Leasing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premier Insurance and Grays Leasing, you can compare the effects of market volatilities on Premier Insurance and Grays Leasing 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 Grays Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Insurance and Grays Leasing.
Diversification Opportunities for Premier Insurance and Grays Leasing
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Premier and Grays is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Premier Insurance and Grays Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grays Leasing 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 Grays Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grays Leasing has no effect on the direction of Premier Insurance i.e., Premier Insurance and Grays Leasing go up and down completely randomly.
Pair Corralation between Premier Insurance and Grays Leasing
Assuming the 90 days trading horizon Premier Insurance is expected to generate 2.26 times less return on investment than Grays Leasing. But when comparing it to its historical volatility, Premier Insurance is 1.41 times less risky than Grays Leasing. It trades about 0.15 of its potential returns per unit of risk. Grays Leasing is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 489.00 in Grays Leasing on September 12, 2024 and sell it today you would earn a total of 143.00 from holding Grays Leasing or generate 29.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Premier Insurance vs. Grays Leasing
Performance |
| Timeline |
| Premier Insurance |
| Grays Leasing |
Premier Insurance and Grays Leasing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Insurance and Grays Leasing
The main advantage of trading using opposite Premier Insurance and Grays Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Insurance position performs unexpectedly, Grays Leasing 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 Grays Leasing will offset losses from the drop in Grays Leasing's long position.| Premier Insurance vs. Pak Datacom | Premier Insurance vs. Habib Insurance | Premier Insurance vs. Jubilee Life Insurance | Premier Insurance vs. Pakistan Tobacco |
| Grays Leasing vs. Masood Textile Mills | Grays Leasing vs. Fauji Foods | Grays Leasing vs. KSB Pumps | Grays Leasing 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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