Correlation Between SBI Insurance and AAC TECHNOLOGHLDGADR
Can any of the company-specific risk be diversified away by investing in both SBI Insurance and AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR, you can compare the effects of market volatilities on SBI Insurance and AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Insurance and AAC TECHNOLOGHLDGADR.
Diversification Opportunities for SBI Insurance and AAC TECHNOLOGHLDGADR
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SBI and AAC is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding SBI Insurance Group and AAC TECHNOLOGHLDGADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAC TECHNOLOGHLDGADR has no effect on the direction of SBI Insurance i.e., SBI Insurance and AAC TECHNOLOGHLDGADR go up and down completely randomly.
Pair Corralation between SBI Insurance and AAC TECHNOLOGHLDGADR
Assuming the 90 days trading horizon SBI Insurance is expected to generate 1.5 times less return on investment than AAC TECHNOLOGHLDGADR. But when comparing it to its historical volatility, SBI Insurance Group is 2.03 times less risky than AAC TECHNOLOGHLDGADR. It trades about 0.24 of its potential returns per unit of risk. AAC TECHNOLOGHLDGADR is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 372.00 in AAC TECHNOLOGHLDGADR on October 11, 2024 and sell it today you would earn a total of 88.00 from holding AAC TECHNOLOGHLDGADR or generate 23.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBI Insurance Group vs. AAC TECHNOLOGHLDGADR
Performance |
| Timeline |
| SBI Insurance Group |
| AAC TECHNOLOGHLDGADR |
SBI Insurance and AAC TECHNOLOGHLDGADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBI Insurance and AAC TECHNOLOGHLDGADR
The main advantage of trading using opposite SBI Insurance and AAC TECHNOLOGHLDGADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Insurance position performs unexpectedly, AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR will offset losses from the drop in AAC TECHNOLOGHLDGADR's long position.| SBI Insurance vs. Performance Food Group | SBI Insurance vs. PREMIER FOODS | SBI Insurance vs. G III Apparel Group | SBI Insurance vs. alstria office REIT AG |
| AAC TECHNOLOGHLDGADR vs. The Hanover Insurance | AAC TECHNOLOGHLDGADR vs. Harmony Gold Mining | AAC TECHNOLOGHLDGADR vs. Perseus Mining Limited | AAC TECHNOLOGHLDGADR vs. Direct Line Insurance |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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