Correlation Between Sabre Insurance and SOGECLAIR

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

Diversification Opportunities for Sabre Insurance and SOGECLAIR

0.22

Correlation Coefficient

Sabre Insurance  SOGECLAIR

Modest diversification

The 3 months correlation between Sabre and SOGECLAIR is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance Group and SOGECLAIR SA INH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOGECLAIR SA INH 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 SOGECLAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOGECLAIR SA INH has no effect on the direction of Sabre Insurance i.e., Sabre Insurance and SOGECLAIR go up and down completely randomly.

Pair Corralation between Sabre Insurance and SOGECLAIR

Assuming the 90 days horizon Sabre Insurance is expected to generate 8.25 times less return on investment than SOGECLAIR. But when comparing it to its historical volatility, Sabre Insurance Group is 2.05 times less risky than SOGECLAIR. It trades about 0.03 of its potential returns per unit of risk. SOGECLAIR SA INH is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,700  in SOGECLAIR SA INH on October 6, 2024 and sell it today you would earn a total of  330.00  from holding SOGECLAIR SA INH or generate 19.41% return on investment over 90 days.

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

Sabre Insurance Group  vs.  SOGECLAIR SA INH

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.

SOGECLAIR SA INH

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sabre Insurance and SOGECLAIR

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

The idea behind Sabre Insurance Group and SOGECLAIR SA INH 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.