Correlation Between Reliance Insurance and EFU General
Can any of the company-specific risk be diversified away by investing in both Reliance Insurance and EFU General 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 EFU General 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 EFU General Insurance, you can compare the effects of market volatilities on Reliance Insurance and EFU General 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 EFU General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Insurance and EFU General.
Diversification Opportunities for Reliance Insurance and EFU General
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Reliance and EFU is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Insurance Co and EFU General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EFU General Insurance 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 EFU General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EFU General Insurance has no effect on the direction of Reliance Insurance i.e., Reliance Insurance and EFU General go up and down completely randomly.
Pair Corralation between Reliance Insurance and EFU General
Assuming the 90 days trading horizon Reliance Insurance Co is expected to under-perform the EFU General. In addition to that, Reliance Insurance is 1.02 times more volatile than EFU General Insurance. It trades about -0.08 of its total potential returns per unit of risk. EFU General Insurance is currently generating about 0.05 per unit of volatility. If you would invest 11,601 in EFU General Insurance on November 4, 2024 and sell it today you would earn a total of 296.00 from holding EFU General Insurance or generate 2.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 81.82% |
| Values | Daily Returns |
Reliance Insurance Co vs. EFU General Insurance
Performance |
| Timeline |
| Reliance Insurance |
| EFU General Insurance |
Reliance Insurance and EFU General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reliance Insurance and EFU General
The main advantage of trading using opposite Reliance Insurance and EFU General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reliance Insurance position performs unexpectedly, EFU General 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 EFU General will offset losses from the drop in EFU General'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 |
| EFU General vs. Pakistan Aluminium Beverage | EFU General vs. Quice Food Industries | EFU General vs. Fauji Foods | EFU General vs. Big Bird Foods |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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