Correlation Between Loads and EFU General

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

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

Diversification Opportunities for Loads and EFU General

0.86

Correlation Coefficient

Loads  EFU General

Very poor diversification

The 3 months correlation between Loads and EFU is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Loads and EFU General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EFU General Insurance and Loads 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 Loads are associated (or correlated) with EFU General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EFU General Insurance has no effect on the direction of Loads i.e., Loads and EFU General go up and down completely randomly.

Pair Corralation between Loads and EFU General

Assuming the 90 days trading horizon Loads is expected to generate 0.87 times more return on investment than EFU General. However, Loads is 1.15 times less risky than EFU General. It trades about 0.2 of its potential returns per unit of risk. EFU General Insurance is currently generating about 0.11 per unit of risk. If you would invest  1,049  in Loads on September 11, 2024 and sell it today you would earn a total of  485.00  from holding Loads or generate 46.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Loads  vs.  EFU General Insurance

Loads

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Loads are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Loads disclosed solid returns over the last few months and may actually be approaching a breakup point.

EFU General Insurance

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EFU General Insurance are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, EFU General sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Loads and EFU General

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

The idea behind Loads and EFU General 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.