Correlation Between InPlay Oil and SBI Insurance
Can any of the company-specific risk be diversified away by investing in both InPlay Oil and SBI 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 InPlay Oil and SBI Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InPlay Oil Corp and SBI Insurance Group, you can compare the effects of market volatilities on InPlay Oil and SBI 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 InPlay Oil with a short position of SBI Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and SBI Insurance.
Diversification Opportunities for InPlay Oil and SBI Insurance
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between InPlay and SBI is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and SBI Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Insurance Group and InPlay Oil 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 InPlay Oil Corp are associated (or correlated) with SBI Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Insurance Group has no effect on the direction of InPlay Oil i.e., InPlay Oil and SBI Insurance go up and down completely randomly.
Pair Corralation between InPlay Oil and SBI Insurance
Assuming the 90 days trading horizon InPlay Oil Corp is expected to under-perform the SBI Insurance. But the stock apears to be less risky and, when comparing its historical volatility, InPlay Oil Corp is 1.04 times less risky than SBI Insurance. The stock trades about -0.02 of its potential returns per unit of risk. The SBI Insurance Group is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 665.00 in SBI Insurance Group on August 31, 2024 and sell it today you would lose (60.00) from holding SBI Insurance Group or give up 9.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
InPlay Oil Corp vs. SBI Insurance Group
Performance |
| Timeline |
| InPlay Oil Corp |
| SBI Insurance Group |
InPlay Oil and SBI Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InPlay Oil and SBI Insurance
The main advantage of trading using opposite InPlay Oil and SBI Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil position performs unexpectedly, SBI 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 SBI Insurance will offset losses from the drop in SBI Insurance's long position.The idea behind InPlay Oil Corp and SBI Insurance Group 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.| SBI Insurance vs. SALESFORCE INC CDR | SBI Insurance vs. Lamar Advertising | SBI Insurance vs. UET United Electronic | SBI Insurance vs. Electronic Arts |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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