Correlation Between GEA GROUP and SBI Insurance
Can any of the company-specific risk be diversified away by investing in both GEA GROUP and SBI Insurance 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 GEA GROUP and SBI Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEA GROUP and SBI Insurance Group, you can compare the effects of market volatilities on GEA GROUP and SBI Insurance 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 GEA GROUP with a short position of SBI Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEA GROUP and SBI Insurance.
Diversification Opportunities for GEA GROUP and SBI Insurance
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GEA and SBI is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding GEA GROUP and SBI Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Insurance Group and GEA GROUP 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 GEA GROUP are associated (or correlated) with SBI Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Insurance Group has no effect on the direction of GEA GROUP i.e., GEA GROUP and SBI Insurance go up and down completely randomly.
Pair Corralation between GEA GROUP and SBI Insurance
Assuming the 90 days horizon GEA GROUP is expected to generate 0.6 times more return on investment than SBI Insurance. However, GEA GROUP is 1.66 times less risky than SBI Insurance. It trades about 0.12 of its potential returns per unit of risk. SBI Insurance Group is currently generating about 0.01 per unit of risk. If you would invest 3,680 in GEA GROUP on November 3, 2024 and sell it today you would earn a total of 1,420 from holding GEA GROUP or generate 38.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GEA GROUP vs. SBI Insurance Group
Performance |
| Timeline |
| GEA GROUP |
| SBI Insurance Group |
GEA GROUP and SBI Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GEA GROUP and SBI Insurance
The main advantage of trading using opposite GEA GROUP and SBI Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEA GROUP position performs unexpectedly, SBI Insurance 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 SBI Insurance will offset losses from the drop in SBI Insurance's long position.| GEA GROUP vs. TreeHouse Foods | GEA GROUP vs. COPLAND ROAD CAPITAL | GEA GROUP vs. Texas Roadhouse | GEA GROUP vs. INDOFOOD AGRI RES |
| SBI Insurance vs. ANGANG STEEL H | SBI Insurance vs. ELL ENVIRONHLDGS HD 0001 | SBI Insurance vs. CITY OFFICE REIT | SBI Insurance vs. CALTAGIRONE EDITORE |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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