Correlation Between Avanos Medical and SBI Insurance

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

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

Diversification Opportunities for Avanos Medical and SBI Insurance

-0.67

Correlation Coefficient

Avanos Medical  SBI Insurance

Excellent diversification

The 3 months correlation between Avanos and SBI is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Avanos Medical 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 Avanos Medical 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 Avanos Medical 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 Avanos Medical i.e., Avanos Medical and SBI Insurance go up and down completely randomly.

Pair Corralation between Avanos Medical and SBI Insurance

Assuming the 90 days trading horizon Avanos Medical is expected to under-perform the SBI Insurance. In addition to that, Avanos Medical is 1.27 times more volatile than SBI Insurance Group. It trades about -0.02 of its total potential returns per unit of risk. SBI Insurance Group is currently generating about 0.02 per unit of volatility. If you would invest  590.00  in SBI Insurance Group on September 23, 2024 and sell it today you would earn a total of  20.00  from holding SBI Insurance Group or generate 3.39% return on investment over 90 days.

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

Avanos Medical  vs.  SBI Insurance Group

Avanos Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avanos Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

SBI Insurance Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SBI Insurance Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SBI Insurance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Avanos Medical and SBI Insurance

The main advantage of trading using opposite Avanos Medical and SBI Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avanos Medical 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 Avanos Medical 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.

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