Correlation Between SBI Investment and Carriesoft

Can any of the company-specific risk be diversified away by investing in both SBI Investment and Carriesoft 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 Investment and Carriesoft into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SBI Investment KOREA and Carriesoft Co, you can compare the effects of market volatilities on SBI Investment and Carriesoft 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 Investment with a short position of Carriesoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Investment and Carriesoft.

Diversification Opportunities for SBI Investment and Carriesoft

-0.67

Correlation Coefficient

SBI Investment  Carriesoft

Excellent diversification

The 3 months correlation between SBI and Carriesoft is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding SBI Investment KOREA and Carriesoft Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carriesoft and SBI Investment 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 Investment KOREA are associated (or correlated) with Carriesoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carriesoft has no effect on the direction of SBI Investment i.e., SBI Investment and Carriesoft go up and down completely randomly.

Pair Corralation between SBI Investment and Carriesoft

Assuming the 90 days trading horizon SBI Investment KOREA is expected to generate 0.88 times more return on investment than Carriesoft. However, SBI Investment KOREA is 1.13 times less risky than Carriesoft. It trades about 0.18 of its potential returns per unit of risk. Carriesoft Co is currently generating about -0.15 per unit of risk. If you would invest  65,900  in SBI Investment KOREA on September 2, 2024 and sell it today you would earn a total of  7,000  from holding SBI Investment KOREA or generate 10.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

SBI Investment KOREA  vs.  Carriesoft Co

SBI Investment KOREA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SBI Investment KOREA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SBI Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Carriesoft

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Carriesoft Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Carriesoft sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SBI Investment and Carriesoft

The main advantage of trading using opposite SBI Investment and Carriesoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Investment position performs unexpectedly, Carriesoft 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 Carriesoft will offset losses from the drop in Carriesoft's long position.

The idea behind SBI Investment KOREA and Carriesoft Co 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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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.