Correlation Between Blue Label and Sabvest Capital

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

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

Diversification Opportunities for Blue Label and Sabvest Capital

-0.74

Correlation Coefficient

Blue Label  Sabvest Capital

Pay attention - limited upside

The 3 months correlation between Blue and Sabvest is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Blue Label Telecoms and Sabvest Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabvest Capital and Blue Label 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 Blue Label Telecoms are associated (or correlated) with Sabvest Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabvest Capital has no effect on the direction of Blue Label i.e., Blue Label and Sabvest Capital go up and down completely randomly.

Pair Corralation between Blue Label and Sabvest Capital

Assuming the 90 days trading horizon Blue Label Telecoms is expected to generate 1.01 times more return on investment than Sabvest Capital. However, Blue Label is 1.01 times more volatile than Sabvest Capital. It trades about 0.27 of its potential returns per unit of risk. Sabvest Capital is currently generating about 0.0 per unit of risk. If you would invest  57,000  in Blue Label Telecoms on December 24, 2024 and sell it today you would earn a total of  20,800  from holding Blue Label Telecoms or generate 36.49% return on investment over 90 days.

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

Blue Label Telecoms  vs.  Sabvest Capital

Blue Label Telecoms

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Label Telecoms are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Blue Label exhibited solid returns over the last few months and may actually be approaching a breakup point.

Sabvest Capital

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Blue Label and Sabvest Capital

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

The idea behind Blue Label Telecoms and Sabvest Capital 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.