Correlation Between Softlogic Life and Singhe Hospitals

Can any of the company-specific risk be diversified away by investing in both Softlogic Life and Singhe Hospitals 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 Softlogic Life and Singhe Hospitals into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Softlogic Life and Singhe Hospitals

0.57

Correlation Coefficient

Softlogic Life  Singhe Hospitals

Very weak diversification

The 3 months correlation between Softlogic and Singhe is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Softlogic Life Insurance and Singhe Hospitals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singhe Hospitals and Softlogic Life 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 Softlogic Life Insurance are associated (or correlated) with Singhe Hospitals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singhe Hospitals has no effect on the direction of Softlogic Life i.e., Softlogic Life and Singhe Hospitals go up and down completely randomly.

Pair Corralation between Softlogic Life and Singhe Hospitals

Assuming the 90 days trading horizon Softlogic Life Insurance is expected to under-perform the Singhe Hospitals. But the stock apears to be less risky and, when comparing its historical volatility, Softlogic Life Insurance is 1.21 times less risky than Singhe Hospitals. The stock trades about -0.02 of its potential returns per unit of risk. The Singhe Hospitals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  270.00  in Singhe Hospitals on October 11, 2024 and sell it today you would lose (10.00) from holding Singhe Hospitals or give up 3.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.0%
Values	Daily Returns

Softlogic Life Insurance  vs.  Singhe Hospitals

Softlogic Life Insurance

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Softlogic Life Insurance are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Softlogic Life sustained solid returns over the last few months and may actually be approaching a breakup point.

Singhe Hospitals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Singhe Hospitals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Singhe Hospitals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Softlogic Life and Singhe Hospitals

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

The idea behind Softlogic Life Insurance and Singhe Hospitals 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.