Correlation Between Askari General and Atlas Insurance

Can any of the company-specific risk be diversified away by investing in both Askari General and Atlas 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 Askari General and Atlas Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Askari General Insurance and Atlas Insurance, you can compare the effects of market volatilities on Askari General and Atlas 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 Askari General with a short position of Atlas Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Askari General and Atlas Insurance.

Diversification Opportunities for Askari General and Atlas Insurance

0.93

Correlation Coefficient

Askari General  Atlas Insurance

Almost no diversification

The 3 months correlation between Askari and Atlas is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Askari General Insurance and Atlas Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Insurance and Askari General 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 Askari General Insurance are associated (or correlated) with Atlas Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Insurance has no effect on the direction of Askari General i.e., Askari General and Atlas Insurance go up and down completely randomly.

Pair Corralation between Askari General and Atlas Insurance

Assuming the 90 days trading horizon Askari General is expected to generate 1.69 times less return on investment than Atlas Insurance. In addition to that, Askari General is 1.23 times more volatile than Atlas Insurance. It trades about 0.14 of its total potential returns per unit of risk. Atlas Insurance is currently generating about 0.3 per unit of volatility. If you would invest  3,964  in Atlas Insurance on September 5, 2024 and sell it today you would earn a total of  1,599  from holding Atlas Insurance or generate 40.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Askari General Insurance  vs.  Atlas Insurance

Askari General Insurance

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Askari General Insurance are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Askari General sustained solid returns over the last few months and may actually be approaching a breakup point.

Atlas Insurance

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Insurance are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Atlas Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Askari General and Atlas Insurance

The main advantage of trading using opposite Askari General and Atlas Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Askari General position performs unexpectedly, Atlas 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 Atlas Insurance will offset losses from the drop in Atlas Insurance's long position.

The idea behind Askari General Insurance and Atlas Insurance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.