Correlation Between Sabre Insurance and Steadfast Group

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

Diversification Opportunities for Sabre Insurance and Steadfast Group

-0.12

Correlation Coefficient

Sabre Insurance  Steadfast Group

Good diversification

The 3 months correlation between Sabre and Steadfast is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance Group and Steadfast Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steadfast Group 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 Steadfast Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steadfast Group has no effect on the direction of Sabre Insurance i.e., Sabre Insurance and Steadfast Group go up and down completely randomly.

Pair Corralation between Sabre Insurance and Steadfast Group

Assuming the 90 days horizon Sabre Insurance Group is expected to generate 1.22 times more return on investment than Steadfast Group. However, Sabre Insurance is 1.22 times more volatile than Steadfast Group Limited. It trades about 0.02 of its potential returns per unit of risk. Steadfast Group Limited is currently generating about 0.02 per unit of risk. If you would invest  159.00  in Sabre Insurance Group on September 27, 2024 and sell it today you would earn a total of  11.00  from holding Sabre Insurance Group or generate 6.92% return on investment over 90 days.

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

Sabre Insurance Group  vs.  Steadfast Group Limited

Sabre Insurance Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sabre Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sabre Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Steadfast Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Steadfast Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Steadfast Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sabre Insurance and Steadfast Group

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

The idea behind Sabre Insurance Group and Steadfast Group Limited 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.