Correlation Between Cantabil Retail and SBI Life

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

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

Diversification Opportunities for Cantabil Retail and SBI Life

0.22

Correlation Coefficient

Cantabil Retail  SBI Life

Modest diversification

The 3 months correlation between Cantabil and SBI is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Cantabil Retail India 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 Cantabil Retail 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 Cantabil Retail India 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 Cantabil Retail i.e., Cantabil Retail and SBI Life go up and down completely randomly.

Pair Corralation between Cantabil Retail and SBI Life

Assuming the 90 days trading horizon Cantabil Retail India is expected to generate 2.71 times more return on investment than SBI Life. However, Cantabil Retail is 2.71 times more volatile than SBI Life Insurance. It trades about 0.01 of its potential returns per unit of risk. SBI Life Insurance is currently generating about -0.03 per unit of risk. If you would invest  23,627  in Cantabil Retail India on December 4, 2024 and sell it today you would lose (238.00) from holding Cantabil Retail India or give up 1.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Cantabil Retail India  vs.  SBI Life Insurance

Cantabil Retail India

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cantabil Retail India are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, Cantabil Retail is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

SBI Life Insurance

Risk-Adjusted Performance

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 rather sound forward indicators, SBI Life is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Cantabil Retail and SBI Life

The main advantage of trading using opposite Cantabil Retail and SBI Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cantabil Retail 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 Cantabil Retail India 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 Stocks Directory module to find actively traded stocks across global markets.