Correlation Between Sabre Insurance and Sydbank A/S

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

Diversification Opportunities for Sabre Insurance and Sydbank A/S

0.13

Correlation Coefficient

Sabre Insurance  Sydbank A/S

Average diversification

The 3 months correlation between Sabre and Sydbank is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance Group and Sydbank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sydbank A/S 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 Sydbank A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sydbank A/S has no effect on the direction of Sabre Insurance i.e., Sabre Insurance and Sydbank A/S go up and down completely randomly.

Pair Corralation between Sabre Insurance and Sydbank A/S

Assuming the 90 days horizon Sabre Insurance is expected to generate 4.23 times less return on investment than Sydbank A/S. But when comparing it to its historical volatility, Sabre Insurance Group is 2.69 times less risky than Sydbank A/S. It trades about 0.05 of its potential returns per unit of risk. Sydbank AS is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,052  in Sydbank AS on October 22, 2024 and sell it today you would earn a total of  3,983  from holding Sydbank AS or generate 378.61% return on investment over 90 days.

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

Sabre Insurance Group  vs.  Sydbank AS

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.

Sydbank A/S

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sydbank AS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sydbank A/S reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sabre Insurance and Sydbank A/S

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

The idea behind Sabre Insurance Group and Sydbank AS 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.