Correlation Between DevEx Resources and SBI Holdings

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

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

Diversification Opportunities for DevEx Resources and SBI Holdings

-0.54

Correlation Coefficient

DevEx Resources  SBI Holdings

Excellent diversification

The 3 months correlation between DevEx and SBI is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding DevEx Resources Limited and SBI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Holdings and DevEx Resources 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 DevEx Resources Limited 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 DevEx Resources i.e., DevEx Resources and SBI Holdings go up and down completely randomly.

Pair Corralation between DevEx Resources and SBI Holdings

Assuming the 90 days horizon DevEx Resources Limited is expected to generate 5.0 times more return on investment than SBI Holdings. However, DevEx Resources is 5.0 times more volatile than SBI Holdings. It trades about 0.04 of its potential returns per unit of risk. SBI Holdings is currently generating about 0.06 per unit of risk. If you would invest  5.95  in DevEx Resources Limited on December 19, 2024 and sell it today you would lose (0.35) from holding DevEx Resources Limited or give up 5.88% of portfolio value over 90 days.

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

DevEx Resources Limited  vs.  SBI Holdings

DevEx Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DevEx Resources Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DevEx Resources reported solid returns over the last few months and may actually be approaching a breakup point.

SBI Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SBI Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, SBI Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with DevEx Resources and SBI Holdings

The main advantage of trading using opposite DevEx Resources and SBI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DevEx Resources 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 DevEx Resources Limited 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.