Correlation Between Highlight Communications and SBI Insurance
Can any of the company-specific risk be diversified away by investing in both Highlight Communications 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 Highlight Communications and SBI Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highlight Communications AG and SBI Insurance Group, you can compare the effects of market volatilities on Highlight Communications 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 Highlight Communications with a short position of SBI Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Communications and SBI Insurance.
Diversification Opportunities for Highlight Communications and SBI Insurance
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Highlight and SBI is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG 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 Highlight Communications 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 Highlight Communications AG 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 Highlight Communications i.e., Highlight Communications and SBI Insurance go up and down completely randomly.
Pair Corralation between Highlight Communications and SBI Insurance
Assuming the 90 days trading horizon Highlight Communications AG is expected to under-perform the SBI Insurance. In addition to that, Highlight Communications is 1.53 times more volatile than SBI Insurance Group. It trades about -0.05 of its total potential returns per unit of risk. SBI Insurance Group is currently generating about 0.0 per unit of volatility. If you would invest 710.00 in SBI Insurance Group on October 17, 2024 and sell it today you would lose (70.00) from holding SBI Insurance Group or give up 9.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highlight Communications AG vs. SBI Insurance Group
Performance |
| Timeline |
| Highlight Communications |
| SBI Insurance Group |
Highlight Communications and SBI Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highlight Communications and SBI Insurance
The main advantage of trading using opposite Highlight Communications and SBI Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highlight Communications 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.The idea behind Highlight Communications AG and SBI Insurance Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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