Correlation Between Nippon Life and Geojit Financial

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

By analyzing existing cross correlation between Nippon Life India and Geojit Financial Services, you can compare the effects of market volatilities on Nippon Life and Geojit Financial 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 Nippon Life with a short position of Geojit Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nippon Life and Geojit Financial.

Diversification Opportunities for Nippon Life and Geojit Financial

-0.28

Correlation Coefficient

Nippon Life  Geojit Financial

Very good diversification

The 3 months correlation between Nippon and Geojit is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Life India and Geojit Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geojit Financial Services and Nippon Life 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 Nippon Life India are associated (or correlated) with Geojit Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geojit Financial Services has no effect on the direction of Nippon Life i.e., Nippon Life and Geojit Financial go up and down completely randomly.

Pair Corralation between Nippon Life and Geojit Financial

Assuming the 90 days trading horizon Nippon Life India is expected to generate 0.51 times more return on investment than Geojit Financial. However, Nippon Life India is 1.96 times less risky than Geojit Financial. It trades about 0.02 of its potential returns per unit of risk. Geojit Financial Services is currently generating about -0.02 per unit of risk. If you would invest  67,643  in Nippon Life India on September 2, 2024 and sell it today you would earn a total of  907.00  from holding Nippon Life India or generate 1.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Nippon Life India  vs.  Geojit Financial Services

Nippon Life India

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nippon Life India are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Nippon Life is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Geojit Financial Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Geojit Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Nippon Life and Geojit Financial

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

The idea behind Nippon Life India and Geojit Financial Services 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.