Correlation Between SBI Insurance and STHREE PLC
Can any of the company-specific risk be diversified away by investing in both SBI Insurance and STHREE PLC 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 STHREE PLC 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 STHREE PLC LS, you can compare the effects of market volatilities on SBI Insurance and STHREE PLC 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 STHREE PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Insurance and STHREE PLC.
Diversification Opportunities for SBI Insurance and STHREE PLC
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBI and STHREE is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding SBI Insurance Group and STHREE PLC LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STHREE PLC LS 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 STHREE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STHREE PLC LS has no effect on the direction of SBI Insurance i.e., SBI Insurance and STHREE PLC go up and down completely randomly.
Pair Corralation between SBI Insurance and STHREE PLC
Assuming the 90 days trading horizon SBI Insurance Group is expected to generate 1.25 times more return on investment than STHREE PLC. However, SBI Insurance is 1.25 times more volatile than STHREE PLC LS. It trades about 0.4 of its potential returns per unit of risk. STHREE PLC LS is currently generating about 0.1 per unit of risk. If you would invest 555.00 in SBI Insurance Group on September 12, 2024 and sell it today you would earn a total of 70.00 from holding SBI Insurance Group or generate 12.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBI Insurance Group vs. STHREE PLC LS
Performance |
| Timeline |
| SBI Insurance Group |
| STHREE PLC LS |
SBI Insurance and STHREE PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBI Insurance and STHREE PLC
The main advantage of trading using opposite SBI Insurance and STHREE PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Insurance position performs unexpectedly, STHREE PLC 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 STHREE PLC will offset losses from the drop in STHREE PLC's long position.| SBI Insurance vs. Apple Inc | SBI Insurance vs. Apple Inc | SBI Insurance vs. Apple Inc | SBI Insurance vs. Apple Inc |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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