Correlation Between SBI Insurance and American Public

Can any of the company-specific risk be diversified away by investing in both SBI Insurance and American Public 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 American Public 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 American Public Education, you can compare the effects of market volatilities on SBI Insurance and American Public 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 American Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Insurance and American Public.

Diversification Opportunities for SBI Insurance and American Public

0.85

Correlation Coefficient

SBI Insurance  American Public

Very poor diversification

The 3 months correlation between SBI and American is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding SBI Insurance Group and American Public Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Public Education 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 American Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Public Education has no effect on the direction of SBI Insurance i.e., SBI Insurance and American Public go up and down completely randomly.

Pair Corralation between SBI Insurance and American Public

Assuming the 90 days trading horizon SBI Insurance Group is expected to generate 0.64 times more return on investment than American Public. However, SBI Insurance Group is 1.57 times less risky than American Public. It trades about 0.25 of its potential returns per unit of risk. American Public Education is currently generating about 0.1 per unit of risk. If you would invest  605.00  in SBI Insurance Group on October 24, 2024 and sell it today you would earn a total of  40.00  from holding SBI Insurance Group or generate 6.61% return on investment over 90 days.

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

SBI Insurance Group  vs.  American Public Education

SBI Insurance Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SBI Insurance Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, SBI Insurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

American Public Education

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in American Public Education are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, American Public reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SBI Insurance and American Public

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

The idea behind SBI Insurance Group and American Public Education 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.