Correlation Between SBI Holdings and NEXTDC
Can any of the company-specific risk be diversified away by investing in both SBI Holdings and NEXTDC 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 Holdings and NEXTDC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBI Holdings and NEXTDC LTD, you can compare the effects of market volatilities on SBI Holdings and NEXTDC 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 Holdings with a short position of NEXTDC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Holdings and NEXTDC.
Diversification Opportunities for SBI Holdings and NEXTDC
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SBI and NEXTDC is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding SBI Holdings and NEXTDC LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXTDC LTD and SBI Holdings 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 Holdings are associated (or correlated) with NEXTDC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXTDC LTD has no effect on the direction of SBI Holdings i.e., SBI Holdings and NEXTDC go up and down completely randomly.
Pair Corralation between SBI Holdings and NEXTDC
Assuming the 90 days trading horizon SBI Holdings is expected to generate 0.89 times more return on investment than NEXTDC. However, SBI Holdings is 1.12 times less risky than NEXTDC. It trades about 0.19 of its potential returns per unit of risk. NEXTDC LTD is currently generating about -0.1 per unit of risk. If you would invest 2,100 in SBI Holdings on October 11, 2024 and sell it today you would earn a total of 340.00 from holding SBI Holdings or generate 16.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBI Holdings vs. NEXTDC LTD
Performance |
| Timeline |
| SBI Holdings |
| NEXTDC LTD |
SBI Holdings and NEXTDC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBI Holdings and NEXTDC
The main advantage of trading using opposite SBI Holdings and NEXTDC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Holdings position performs unexpectedly, NEXTDC 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 NEXTDC will offset losses from the drop in NEXTDC's long position.| SBI Holdings vs. VULCAN MATERIALS | SBI Holdings vs. ANGANG STEEL H | SBI Holdings vs. CALTAGIRONE EDITORE | SBI Holdings vs. Mitsubishi Materials |
| NEXTDC vs. CODERE ONLINE LUX | NEXTDC vs. OPKO HEALTH | NEXTDC vs. CITY OFFICE REIT | NEXTDC vs. US Physical Therapy |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |