Correlation Between Sabre Insurance and Young Cos
Can any of the company-specific risk be diversified away by investing in both Sabre Insurance and Young Cos 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 Sabre Insurance and Young Cos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sabre Insurance Group and Young Cos Brewery, you can compare the effects of market volatilities on Sabre Insurance and Young Cos 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 Sabre Insurance with a short position of Young Cos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabre Insurance and Young Cos.
Diversification Opportunities for Sabre Insurance and Young Cos
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sabre and Young is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance Group and Young Cos Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Young Cos Brewery and Sabre 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 Sabre Insurance Group are associated (or correlated) with Young Cos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Young Cos Brewery has no effect on the direction of Sabre Insurance i.e., Sabre Insurance and Young Cos go up and down completely randomly.
Pair Corralation between Sabre Insurance and Young Cos
Assuming the 90 days trading horizon Sabre Insurance Group is expected to under-perform the Young Cos. But the stock apears to be less risky and, when comparing its historical volatility, Sabre Insurance Group is 1.3 times less risky than Young Cos. The stock trades about -0.18 of its potential returns per unit of risk. The Young Cos Brewery is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 61,800 in Young Cos Brewery on November 7, 2024 and sell it today you would lose (3,400) from holding Young Cos Brewery or give up 5.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sabre Insurance Group vs. Young Cos Brewery
Performance |
| Timeline |
| Sabre Insurance Group |
| Young Cos Brewery |
Sabre Insurance and Young Cos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabre Insurance and Young Cos
The main advantage of trading using opposite Sabre Insurance and Young Cos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabre Insurance position performs unexpectedly, Young Cos 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 Young Cos will offset losses from the drop in Young Cos' long position.| Sabre Insurance vs. Cairo Communication SpA | Sabre Insurance vs. Zegona Communications Plc | Sabre Insurance vs. Gamma Communications PLC | Sabre Insurance vs. Universal Display Corp |
| Young Cos vs. Gamma Communications PLC | Young Cos vs. Geely Automobile Holdings | Young Cos vs. Naked Wines plc | Young Cos vs. Roadside Real Estate |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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