Correlation Between SBI Insurance and Major Drilling
Can any of the company-specific risk be diversified away by investing in both SBI Insurance and Major Drilling 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 SBI Insurance and Major Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBI Insurance Group and Major Drilling Group, you can compare the effects of market volatilities on SBI Insurance and Major Drilling 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 SBI Insurance with a short position of Major Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Insurance and Major Drilling.
Diversification Opportunities for SBI Insurance and Major Drilling
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SBI and Major is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding SBI Insurance Group and Major Drilling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major Drilling Group and SBI 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 SBI Insurance Group are associated (or correlated) with Major Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Major Drilling Group has no effect on the direction of SBI Insurance i.e., SBI Insurance and Major Drilling go up and down completely randomly.
Pair Corralation between SBI Insurance and Major Drilling
Assuming the 90 days trading horizon SBI Insurance Group is expected to generate 0.83 times more return on investment than Major Drilling. However, SBI Insurance Group is 1.2 times less risky than Major Drilling. It trades about 0.01 of its potential returns per unit of risk. Major Drilling Group is currently generating about -0.01 per unit of risk. If you would invest 625.00 in SBI Insurance Group on September 12, 2024 and sell it today you would earn a total of 0.00 from holding SBI Insurance Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBI Insurance Group vs. Major Drilling Group
Performance |
| Timeline |
| SBI Insurance Group |
| Major Drilling Group |
SBI Insurance and Major Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBI Insurance and Major Drilling
The main advantage of trading using opposite SBI Insurance and Major Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Insurance position performs unexpectedly, Major Drilling 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 Major Drilling will offset losses from the drop in Major Drilling's long position.| SBI Insurance vs. Apple Inc | SBI Insurance vs. Apple Inc | SBI Insurance vs. Apple Inc | SBI Insurance vs. Apple Inc |
| Major Drilling vs. Focus Home Interactive | Major Drilling vs. Japan Post Insurance | Major Drilling vs. MI Homes | Major Drilling vs. INSURANCE AUST GRP |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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