Correlation Between Astar and SBI Holdings

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

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

Diversification Opportunities for Astar and SBI Holdings

0.07

Correlation Coefficient

Astar  SBI Holdings

Significant diversification

The 3 months correlation between Astar and SBI is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Astar and SBI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Holdings and Astar 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 Astar are associated (or correlated) with SBI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Holdings has no effect on the direction of Astar i.e., Astar and SBI Holdings go up and down completely randomly.

Pair Corralation between Astar and SBI Holdings

Assuming the 90 days trading horizon Astar is expected to generate 7.4 times less return on investment than SBI Holdings. In addition to that, Astar is 2.69 times more volatile than SBI Holdings. It trades about 0.01 of its total potential returns per unit of risk. SBI Holdings is currently generating about 0.19 per unit of volatility. If you would invest  1,970  in SBI Holdings on October 26, 2024 and sell it today you would earn a total of  470.00  from holding SBI Holdings or generate 23.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Astar  vs.  SBI Holdings

Astar

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Astar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Astar is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

SBI Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SBI Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SBI Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Astar and SBI Holdings

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

The idea behind Astar and SBI Holdings 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.