Correlation Between Reliance Insurance and Gul Ahmed
Can any of the company-specific risk be diversified away by investing in both Reliance Insurance and Gul Ahmed 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 Gul Ahmed 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 Gul Ahmed Textile, you can compare the effects of market volatilities on Reliance Insurance and Gul Ahmed 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 Gul Ahmed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Insurance and Gul Ahmed.
Diversification Opportunities for Reliance Insurance and Gul Ahmed
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Reliance and Gul is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Insurance Co and Gul Ahmed Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gul Ahmed Textile 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 Gul Ahmed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gul Ahmed Textile has no effect on the direction of Reliance Insurance i.e., Reliance Insurance and Gul Ahmed go up and down completely randomly.
Pair Corralation between Reliance Insurance and Gul Ahmed
Assuming the 90 days trading horizon Reliance Insurance Co is expected to generate 1.48 times more return on investment than Gul Ahmed. However, Reliance Insurance is 1.48 times more volatile than Gul Ahmed Textile. It trades about 0.06 of its potential returns per unit of risk. Gul Ahmed Textile is currently generating about 0.02 per unit of risk. If you would invest 1,197 in Reliance Insurance Co on October 25, 2024 and sell it today you would earn a total of 38.00 from holding Reliance Insurance Co or generate 3.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reliance Insurance Co vs. Gul Ahmed Textile
Performance |
| Timeline |
| Reliance Insurance |
| Gul Ahmed Textile |
Reliance Insurance and Gul Ahmed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reliance Insurance and Gul Ahmed
The main advantage of trading using opposite Reliance Insurance and Gul Ahmed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reliance Insurance position performs unexpectedly, Gul Ahmed 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 Gul Ahmed will offset losses from the drop in Gul Ahmed's long position.| Reliance Insurance vs. Beco Steel | Reliance Insurance vs. Unity Foods | Reliance Insurance vs. Pakistan Telecommunication | Reliance Insurance vs. National Foods |
| Gul Ahmed vs. Atlas Insurance | Gul Ahmed vs. Habib Insurance | Gul Ahmed vs. Unilever Pakistan Foods | Gul Ahmed vs. Pakistan Reinsurance |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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