Correlation Between Carsales and SBI Insurance
Can any of the company-specific risk be diversified away by investing in both Carsales 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 Carsales and SBI Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carsales and SBI Insurance Group, you can compare the effects of market volatilities on Carsales 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 Carsales with a short position of SBI Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and SBI Insurance.
Diversification Opportunities for Carsales and SBI Insurance
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Carsales and SBI is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Carsales 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 Carsales 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 Carsales 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 Carsales i.e., Carsales and SBI Insurance go up and down completely randomly.
Pair Corralation between Carsales and SBI Insurance
Assuming the 90 days trading horizon Carsales is expected to generate 0.9 times more return on investment than SBI Insurance. However, Carsales is 1.12 times less risky than SBI Insurance. It trades about 0.08 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 1,346 in Carsales on November 9, 2024 and sell it today you would earn a total of 1,074 from holding Carsales or generate 79.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carsales vs. SBI Insurance Group
Performance |
| Timeline |
| Carsales |
| SBI Insurance Group |
Carsales and SBI Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carsales and SBI Insurance
The main advantage of trading using opposite Carsales and SBI Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carsales 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.| Carsales vs. SINGAPORE AIRLINES | Carsales vs. SOLSTAD OFFSHORE NK | Carsales vs. United Airlines Holdings | Carsales vs. AEGEAN AIRLINES |
| 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 |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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