Correlation Between SIS and Life Insurance
Can any of the company-specific risk be diversified away by investing in both SIS and Life 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 SIS and Life Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIS LIMITED and Life Insurance, you can compare the effects of market volatilities on SIS and Life 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 SIS with a short position of Life Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIS and Life Insurance.
Diversification Opportunities for SIS and Life Insurance
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SIS and Life is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding SIS LIMITED and Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Insurance and SIS 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 SIS LIMITED are associated (or correlated) with Life Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Insurance has no effect on the direction of SIS i.e., SIS and Life Insurance go up and down completely randomly.
Pair Corralation between SIS and Life Insurance
Assuming the 90 days trading horizon SIS LIMITED is expected to under-perform the Life Insurance. But the stock apears to be less risky and, when comparing its historical volatility, SIS LIMITED is 1.27 times less risky than Life Insurance. The stock trades about -0.19 of its potential returns per unit of risk. The Life Insurance is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 92,305 in Life Insurance on September 1, 2024 and sell it today you would earn a total of 6,245 from holding Life Insurance or generate 6.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
SIS LIMITED vs. Life Insurance
Performance |
| Timeline |
| SIS LIMITED |
| Life Insurance |
SIS and Life Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIS and Life Insurance
The main advantage of trading using opposite SIS and Life Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIS position performs unexpectedly, Life 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 Life Insurance will offset losses from the drop in Life Insurance's long position.| SIS vs. UTI Asset Management | SIS vs. Shemaroo Entertainment Limited | SIS vs. Bharat Road Network | SIS vs. Tata Communications Limited |
| Life Insurance vs. Reliance Industries Limited | Life Insurance vs. Indian Oil | Life Insurance vs. Oil Natural Gas |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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