Correlation Between TPL Insurance and Nimir Industrial
Can any of the company-specific risk be diversified away by investing in both TPL Insurance and Nimir Industrial 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 TPL Insurance and Nimir Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TPL Insurance and Nimir Industrial Chemical, you can compare the effects of market volatilities on TPL Insurance and Nimir Industrial 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 TPL Insurance with a short position of Nimir Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPL Insurance and Nimir Industrial.
Diversification Opportunities for TPL Insurance and Nimir Industrial
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TPL and Nimir is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding TPL Insurance and Nimir Industrial Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nimir Industrial Chemical and TPL 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 TPL Insurance are associated (or correlated) with Nimir Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nimir Industrial Chemical has no effect on the direction of TPL Insurance i.e., TPL Insurance and Nimir Industrial go up and down completely randomly.
Pair Corralation between TPL Insurance and Nimir Industrial
Assuming the 90 days trading horizon TPL Insurance is expected to under-perform the Nimir Industrial. But the stock apears to be less risky and, when comparing its historical volatility, TPL Insurance is 1.09 times less risky than Nimir Industrial. The stock trades about -0.02 of its potential returns per unit of risk. The Nimir Industrial Chemical is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5,312 in Nimir Industrial Chemical on October 25, 2024 and sell it today you would earn a total of 9,188 from holding Nimir Industrial Chemical or generate 172.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.16% |
| Values | Daily Returns |
TPL Insurance vs. Nimir Industrial Chemical
Performance |
| Timeline |
| TPL Insurance |
| Nimir Industrial Chemical |
TPL Insurance and Nimir Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TPL Insurance and Nimir Industrial
The main advantage of trading using opposite TPL Insurance and Nimir Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TPL Insurance position performs unexpectedly, Nimir Industrial 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 Nimir Industrial will offset losses from the drop in Nimir Industrial's long position.| TPL Insurance vs. Shifa International Hospitals | TPL Insurance vs. Agritech | TPL Insurance vs. IGI Life Insurance | TPL Insurance vs. Sindh Modaraba Management |
| Nimir Industrial vs. Soneri Bank | Nimir Industrial vs. Pakistan Reinsurance | Nimir Industrial vs. Habib Insurance | Nimir Industrial vs. Bank of Punjab |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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