Correlation Between SBI Insurance and PACIFIC ONLINE

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

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

Diversification Opportunities for SBI Insurance and PACIFIC ONLINE

0.0

Correlation Coefficient

SBI Insurance  PACIFIC ONLINE

Pay attention - limited upside

The 3 months correlation between SBI and PACIFIC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SBI Insurance Group and PACIFIC ONLINE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACIFIC ONLINE and SBI Insurance 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 SBI Insurance Group are associated (or correlated) with PACIFIC ONLINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACIFIC ONLINE has no effect on the direction of SBI Insurance i.e., SBI Insurance and PACIFIC ONLINE go up and down completely randomly.

Pair Corralation between SBI Insurance and PACIFIC ONLINE

Assuming the 90 days trading horizon SBI Insurance Group is expected to under-perform the PACIFIC ONLINE. But the stock apears to be less risky and, when comparing its historical volatility, SBI Insurance Group is 1.66 times less risky than PACIFIC ONLINE. The stock trades about -0.01 of its potential returns per unit of risk. The PACIFIC ONLINE is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  10.00  in PACIFIC ONLINE on September 25, 2024 and sell it today you would earn a total of  5.00  from holding PACIFIC ONLINE or generate 50.0% return on investment over 90 days.

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

SBI Insurance Group  vs.  PACIFIC ONLINE

SBI Insurance Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SBI Insurance Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SBI Insurance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PACIFIC ONLINE

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SBI Insurance and PACIFIC ONLINE

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

The idea behind SBI Insurance Group and PACIFIC ONLINE 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.