Correlation Between Byke Hospitality and SBI Life

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

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

Diversification Opportunities for Byke Hospitality and SBI Life

-0.73

Correlation Coefficient

Byke Hospitality  SBI Life

Pay attention - limited upside

The 3 months correlation between Byke and SBI is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding The Byke Hospitality and SBI Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Life Insurance and Byke Hospitality 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 The Byke Hospitality are associated (or correlated) with SBI Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Life Insurance has no effect on the direction of Byke Hospitality i.e., Byke Hospitality and SBI Life go up and down completely randomly.

Pair Corralation between Byke Hospitality and SBI Life

Assuming the 90 days trading horizon The Byke Hospitality is expected to generate 2.62 times more return on investment than SBI Life. However, Byke Hospitality is 2.62 times more volatile than SBI Life Insurance. It trades about 0.49 of its potential returns per unit of risk. SBI Life Insurance is currently generating about 0.05 per unit of risk. If you would invest  7,611  in The Byke Hospitality on October 6, 2024 and sell it today you would earn a total of  2,263  from holding The Byke Hospitality or generate 29.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

The Byke Hospitality  vs.  SBI Life Insurance

Byke Hospitality

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Byke Hospitality are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Byke Hospitality unveiled solid returns over the last few months and may actually be approaching a breakup point.

SBI Life Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SBI Life Insurance 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 forward indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Byke Hospitality and SBI Life

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

The idea behind The Byke Hospitality and SBI Life Insurance 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.