Correlation Between SBI Insurance and Indutrade
Can any of the company-specific risk be diversified away by investing in both SBI Insurance and Indutrade 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 Indutrade 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 Indutrade AB, you can compare the effects of market volatilities on SBI Insurance and Indutrade 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 Indutrade. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Insurance and Indutrade.
Diversification Opportunities for SBI Insurance and Indutrade
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SBI and Indutrade is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding SBI Insurance Group and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade AB 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 Indutrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indutrade AB has no effect on the direction of SBI Insurance i.e., SBI Insurance and Indutrade go up and down completely randomly.
Pair Corralation between SBI Insurance and Indutrade
Assuming the 90 days trading horizon SBI Insurance is expected to generate 4.52 times less return on investment than Indutrade. But when comparing it to its historical volatility, SBI Insurance Group is 1.11 times less risky than Indutrade. It trades about 0.01 of its potential returns per unit of risk. Indutrade AB is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,597 in Indutrade AB on November 9, 2024 and sell it today you would earn a total of 1,059 from holding Indutrade AB or generate 66.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBI Insurance Group vs. Indutrade AB
Performance |
| Timeline |
| SBI Insurance Group |
| Indutrade AB |
SBI Insurance and Indutrade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBI Insurance and Indutrade
The main advantage of trading using opposite SBI Insurance and Indutrade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Insurance position performs unexpectedly, Indutrade 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 Indutrade will offset losses from the drop in Indutrade's long position.| SBI Insurance vs. VIVA WINE GROUP | SBI Insurance vs. USWE SPORTS AB | SBI Insurance vs. PLAY2CHILL SA ZY | SBI Insurance vs. TRAVEL LEISURE DL 01 |
| Indutrade vs. Rocket Internet SE | Indutrade vs. Perseus Mining Limited | Indutrade vs. INTERNET INJPADR 1 | Indutrade vs. Highlight Communications AG |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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