Correlation Between Reliance Insurance and Bank of Punjab
Can any of the company-specific risk be diversified away by investing in both Reliance Insurance and Bank of Punjab 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 Reliance Insurance and Bank of Punjab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reliance Insurance Co and Bank of Punjab, you can compare the effects of market volatilities on Reliance Insurance and Bank of Punjab 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 Reliance Insurance with a short position of Bank of Punjab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Insurance and Bank of Punjab.
Diversification Opportunities for Reliance Insurance and Bank of Punjab
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Reliance and Bank is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Insurance Co and Bank of Punjab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Punjab and Reliance 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 Reliance Insurance Co are associated (or correlated) with Bank of Punjab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Punjab has no effect on the direction of Reliance Insurance i.e., Reliance Insurance and Bank of Punjab go up and down completely randomly.
Pair Corralation between Reliance Insurance and Bank of Punjab
Assuming the 90 days trading horizon Reliance Insurance Co is expected to generate 1.83 times more return on investment than Bank of Punjab. However, Reliance Insurance is 1.83 times more volatile than Bank of Punjab. It trades about -0.08 of its potential returns per unit of risk. Bank of Punjab is currently generating about -0.19 per unit of risk. If you would invest 1,190 in Reliance Insurance Co on November 4, 2024 and sell it today you would lose (63.00) from holding Reliance Insurance Co or give up 5.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 81.82% |
| Values | Daily Returns |
Reliance Insurance Co vs. Bank of Punjab
Performance |
| Timeline |
| Reliance Insurance |
| Bank of Punjab |
Reliance Insurance and Bank of Punjab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reliance Insurance and Bank of Punjab
The main advantage of trading using opposite Reliance Insurance and Bank of Punjab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reliance Insurance position performs unexpectedly, Bank of Punjab 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 Bank of Punjab will offset losses from the drop in Bank of Punjab's long position.| Reliance Insurance vs. Fateh Sports Wear | Reliance Insurance vs. Century Insurance | Reliance Insurance vs. WorldCall Telecom | Reliance Insurance vs. 786 Investment Limited |
| Bank of Punjab vs. Ghani Chemical Industries | Bank of Punjab vs. East West Insurance | Bank of Punjab vs. Shaheen Insurance | Bank of Punjab vs. First Fidelity Leasing |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |