Correlation Between Sabre Insurance and SOFTBANK CORP

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

Diversification Opportunities for Sabre Insurance and SOFTBANK CORP

-0.18
  Correlation Coefficient

Good diversification

The 3 months correlation between Sabre and SOFTBANK is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance Group and SOFTBANK P ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFTBANK P ADR 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 SOFTBANK CORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOFTBANK P ADR has no effect on the direction of Sabre Insurance i.e., Sabre Insurance and SOFTBANK CORP go up and down completely randomly.

Pair Corralation between Sabre Insurance and SOFTBANK CORP

Assuming the 90 days horizon Sabre Insurance is expected to generate 1.0 times less return on investment than SOFTBANK CORP. But when comparing it to its historical volatility, Sabre Insurance Group is 1.99 times less risky than SOFTBANK CORP. It trades about 0.03 of its potential returns per unit of risk. SOFTBANK P ADR is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,130  in SOFTBANK P ADR on October 6, 2024 and sell it today you would earn a total of  0.00  from holding SOFTBANK P ADR or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy97.5%
ValuesDaily Returns

Sabre Insurance Group  vs.  SOFTBANK P ADR

 Performance 
       Timeline  
Sabre Insurance Group 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
SOFTBANK P ADR 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in SOFTBANK P ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, SOFTBANK CORP is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Sabre Insurance and SOFTBANK CORP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sabre Insurance and SOFTBANK CORP

The main advantage of trading using opposite Sabre Insurance and SOFTBANK CORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabre Insurance position performs unexpectedly, SOFTBANK CORP 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 SOFTBANK CORP will offset losses from the drop in SOFTBANK CORP's long position.
The idea behind Sabre Insurance Group and SOFTBANK P ADR 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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