Correlation Between SBI Investment and Coloray International

Can any of the company-specific risk be diversified away by investing in both SBI Investment and Coloray International 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 Coloray International 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 Coloray International Investment, you can compare the effects of market volatilities on SBI Investment and Coloray International 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 Coloray International. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Investment and Coloray International.

Diversification Opportunities for SBI Investment and Coloray International

-0.76

Correlation Coefficient

SBI Investment  Coloray International

Pay attention - limited upside

The 3 months correlation between SBI and Coloray is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding SBI Investment KOREA and Coloray International Investme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coloray International 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 Coloray International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coloray International has no effect on the direction of SBI Investment i.e., SBI Investment and Coloray International go up and down completely randomly.

Pair Corralation between SBI Investment and Coloray International

Assuming the 90 days trading horizon SBI Investment KOREA is expected to under-perform the Coloray International. But the stock apears to be less risky and, when comparing its historical volatility, SBI Investment KOREA is 1.75 times less risky than Coloray International. The stock trades about -0.12 of its potential returns per unit of risk. The Coloray International Investment is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  55,600  in Coloray International Investment on December 29, 2024 and sell it today you would earn a total of  25,500  from holding Coloray International Investment or generate 45.86% 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.  Coloray International Investme

SBI Investment KOREA

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Coloray International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Coloray International Investment are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Coloray International sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SBI Investment and Coloray International

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

The idea behind SBI Investment KOREA and Coloray International Investment 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.