Correlation Between Apple and SBI Insurance
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and SBI Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and SBI Insurance Group, you can compare the effects of market volatilities on Apple 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 Apple with a short position of SBI Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and SBI Insurance.
Diversification Opportunities for Apple and SBI Insurance
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Apple and SBI is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc 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 Apple 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 Apple Inc 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 Apple i.e., Apple and SBI Insurance go up and down completely randomly.
Pair Corralation between Apple and SBI Insurance
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.78 times more return on investment than SBI Insurance. However, Apple Inc is 1.27 times less risky than SBI Insurance. It trades about 0.08 of its potential returns per unit of risk. SBI Insurance Group is currently generating about 0.01 per unit of risk. If you would invest 13,263 in Apple Inc on August 28, 2024 and sell it today you would earn a total of 8,822 from holding Apple Inc or generate 66.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. SBI Insurance Group
Performance |
| Timeline |
| Apple Inc |
| SBI Insurance Group |
Apple and SBI Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and SBI Insurance
The main advantage of trading using opposite Apple and SBI Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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 Apple Inc 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. Apple Inc | SBI Insurance vs. Apple Inc | SBI Insurance vs. Apple Inc | SBI Insurance vs. Apple Inc |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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