Correlation Between General Insurance and Le Travenues

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

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

Diversification Opportunities for General Insurance and Le Travenues

0.23

Correlation Coefficient

General Insurance  Le Travenues

Modest diversification

The 3 months correlation between General and IXIGO is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding General Insurance and Le Travenues Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Le Travenues Technology and General 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 General Insurance are associated (or correlated) with Le Travenues. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Le Travenues Technology has no effect on the direction of General Insurance i.e., General Insurance and Le Travenues go up and down completely randomly.

Pair Corralation between General Insurance and Le Travenues

Assuming the 90 days trading horizon General Insurance is expected to generate 0.77 times more return on investment than Le Travenues. However, General Insurance is 1.29 times less risky than Le Travenues. It trades about 0.1 of its potential returns per unit of risk. Le Travenues Technology is currently generating about 0.03 per unit of risk. If you would invest  39,505  in General Insurance on September 18, 2024 and sell it today you would earn a total of  4,740  from holding General Insurance or generate 12.0% return on investment over 90 days.

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

General Insurance  vs.  Le Travenues Technology

General Insurance

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in General Insurance are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, General Insurance displayed solid returns over the last few months and may actually be approaching a breakup point.

Le Travenues Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Le Travenues Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Le Travenues is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with General Insurance and Le Travenues

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

The idea behind General Insurance and Le Travenues Technology 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.