Correlation Between Security Investment and Premier Insurance
Can any of the company-specific risk be diversified away by investing in both Security Investment and Premier 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 Security Investment and Premier Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Security Investment Bank and Premier Insurance, you can compare the effects of market volatilities on Security Investment and Premier 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 Security Investment with a short position of Premier Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Security Investment and Premier Insurance.
Diversification Opportunities for Security Investment and Premier Insurance
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Security and Premier is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Security Investment Bank and Premier Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Insurance and Security Investment 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 Security Investment Bank are associated (or correlated) with Premier Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Insurance has no effect on the direction of Security Investment i.e., Security Investment and Premier Insurance go up and down completely randomly.
Pair Corralation between Security Investment and Premier Insurance
Assuming the 90 days trading horizon Security Investment Bank is expected to generate 1.19 times more return on investment than Premier Insurance. However, Security Investment is 1.19 times more volatile than Premier Insurance. It trades about 0.05 of its potential returns per unit of risk. Premier Insurance is currently generating about 0.03 per unit of risk. If you would invest 384.00 in Security Investment Bank on September 14, 2024 and sell it today you would earn a total of 113.00 from holding Security Investment Bank or generate 29.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 72.27% |
| Values | Daily Returns |
Security Investment Bank vs. Premier Insurance
Performance |
| Timeline |
| Security Investment Bank |
| Premier Insurance |
Security Investment and Premier Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Security Investment and Premier Insurance
The main advantage of trading using opposite Security Investment and Premier Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Security Investment position performs unexpectedly, Premier 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 Premier Insurance will offset losses from the drop in Premier Insurance's long position.| Security Investment vs. Pakistan Tobacco | Security Investment vs. MCB Investment Manag | Security Investment vs. Allied Bank | Security Investment vs. Pak Datacom |
| Premier Insurance vs. JS Investments | Premier Insurance vs. MCB Investment Manag | Premier Insurance vs. Security Investment Bank | Premier Insurance vs. Nimir Industrial Chemical |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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