Correlation Between SBI Insurance and Applied Materials
Can any of the company-specific risk be diversified away by investing in both SBI Insurance and Applied Materials 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 Applied Materials 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 Applied Materials, you can compare the effects of market volatilities on SBI Insurance and Applied Materials 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 Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Insurance and Applied Materials.
Diversification Opportunities for SBI Insurance and Applied Materials
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBI and Applied is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding SBI Insurance Group and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials 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 Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of SBI Insurance i.e., SBI Insurance and Applied Materials go up and down completely randomly.
Pair Corralation between SBI Insurance and Applied Materials
Assuming the 90 days trading horizon SBI Insurance Group is expected to under-perform the Applied Materials. But the stock apears to be less risky and, when comparing its historical volatility, SBI Insurance Group is 1.33 times less risky than Applied Materials. The stock trades about 0.0 of its potential returns per unit of risk. The Applied Materials is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 9,900 in Applied Materials on September 3, 2024 and sell it today you would earn a total of 6,978 from holding Applied Materials or generate 70.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBI Insurance Group vs. Applied Materials
Performance |
| Timeline |
| SBI Insurance Group |
| Applied Materials |
SBI Insurance and Applied Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBI Insurance and Applied Materials
The main advantage of trading using opposite SBI Insurance and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Insurance position performs unexpectedly, Applied Materials 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 Applied Materials will offset losses from the drop in Applied Materials' long position.| SBI Insurance vs. Richardson Electronics | SBI Insurance vs. Methode Electronics | SBI Insurance vs. HOCHSCHILD MINING | SBI Insurance vs. Benchmark Electronics |
| Applied Materials vs. ASML HOLDING NY | Applied Materials vs. ASML Holding NV | Applied Materials vs. ASML Holding NV | Applied Materials vs. Lam Research |
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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