Correlation Between Universal Insurance and ORIX Leasing
Can any of the company-specific risk be diversified away by investing in both Universal Insurance and ORIX Leasing 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 Universal Insurance and ORIX Leasing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Insurance and ORIX Leasing Pakistan, you can compare the effects of market volatilities on Universal Insurance and ORIX Leasing 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 Universal Insurance with a short position of ORIX Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Insurance and ORIX Leasing.
Diversification Opportunities for Universal Insurance and ORIX Leasing
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Universal and ORIX is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Universal Insurance and ORIX Leasing Pakistan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORIX Leasing Pakistan and Universal 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 Universal Insurance are associated (or correlated) with ORIX Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORIX Leasing Pakistan has no effect on the direction of Universal Insurance i.e., Universal Insurance and ORIX Leasing go up and down completely randomly.
Pair Corralation between Universal Insurance and ORIX Leasing
Assuming the 90 days trading horizon Universal Insurance is expected to under-perform the ORIX Leasing. In addition to that, Universal Insurance is 1.79 times more volatile than ORIX Leasing Pakistan. It trades about -0.12 of its total potential returns per unit of risk. ORIX Leasing Pakistan is currently generating about 0.01 per unit of volatility. If you would invest 3,549 in ORIX Leasing Pakistan on October 13, 2024 and sell it today you would lose (7.00) from holding ORIX Leasing Pakistan or give up 0.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Insurance vs. ORIX Leasing Pakistan
Performance |
| Timeline |
| Universal Insurance |
| ORIX Leasing Pakistan |
Universal Insurance and ORIX Leasing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Insurance and ORIX Leasing
The main advantage of trading using opposite Universal Insurance and ORIX Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Insurance position performs unexpectedly, ORIX Leasing 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 ORIX Leasing will offset losses from the drop in ORIX Leasing's long position.| Universal Insurance vs. Masood Textile Mills | Universal Insurance vs. Fauji Foods | Universal Insurance vs. KSB Pumps | Universal Insurance vs. Mari Petroleum |
| ORIX Leasing vs. Fauji Foods | ORIX Leasing vs. Universal Insurance | ORIX Leasing vs. JS Global Banking | ORIX Leasing vs. NetSol Technologies |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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