Correlation Between Cardiff Property and Sabre Insurance

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

By analyzing existing cross correlation between Cardiff Property PLC and Sabre Insurance Group, you can compare the effects of market volatilities on Cardiff Property and Sabre Insurance 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 Cardiff Property with a short position of Sabre Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardiff Property and Sabre Insurance.

Diversification Opportunities for Cardiff Property and Sabre Insurance

0.07

Correlation Coefficient

Cardiff Property  Sabre Insurance

Significant diversification

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

Pair Corralation between Cardiff Property and Sabre Insurance

Assuming the 90 days trading horizon Cardiff Property PLC is expected to generate 0.34 times more return on investment than Sabre Insurance. However, Cardiff Property PLC is 2.97 times less risky than Sabre Insurance. It trades about 0.09 of its potential returns per unit of risk. Sabre Insurance Group is currently generating about -0.02 per unit of risk. If you would invest  230,000  in Cardiff Property PLC on October 4, 2024 and sell it today you would earn a total of  15,000  from holding Cardiff Property PLC or generate 6.52% return on investment over 90 days.

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

Cardiff Property PLC  vs.  Sabre Insurance Group

Cardiff Property PLC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cardiff Property PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Cardiff Property may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sabre Insurance Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sabre Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Sabre Insurance is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cardiff Property and Sabre Insurance

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

The idea behind Cardiff Property PLC and Sabre Insurance Group 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.