Correlation Between DXC Technology and SBI Insurance

Can any of the company-specific risk be diversified away by investing in both DXC Technology and SBI Insurance 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 DXC Technology and SBI Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DXC Technology Co and SBI Insurance Group, you can compare the effects of market volatilities on DXC Technology and SBI Insurance 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 DXC Technology with a short position of SBI Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and SBI Insurance.

Diversification Opportunities for DXC Technology and SBI Insurance

0.24

Correlation Coefficient

DXC Technology  SBI Insurance

Modest diversification

The 3 months correlation between DXC and SBI is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and SBI Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Insurance Group and DXC Technology 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 DXC Technology Co are associated (or correlated) with SBI Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Insurance Group has no effect on the direction of DXC Technology i.e., DXC Technology and SBI Insurance go up and down completely randomly.

Pair Corralation between DXC Technology and SBI Insurance

Assuming the 90 days trading horizon DXC Technology is expected to generate 4.84 times less return on investment than SBI Insurance. In addition to that, DXC Technology is 1.66 times more volatile than SBI Insurance Group. It trades about 0.03 of its total potential returns per unit of risk. SBI Insurance Group is currently generating about 0.26 per unit of volatility. If you would invest  550.00  in SBI Insurance Group on October 6, 2024 and sell it today you would earn a total of  100.00  from holding SBI Insurance Group or generate 18.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.5%
Values	Daily Returns

DXC Technology Co  vs.  SBI Insurance Group

DXC Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DXC Technology Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, DXC Technology is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

SBI Insurance Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SBI Insurance Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, SBI Insurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DXC Technology and SBI Insurance

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

The idea behind DXC Technology Co and SBI Insurance Group 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.