Correlation Between SBI Insurance and Poste Italiane

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

Diversification Opportunities for SBI Insurance and Poste Italiane

0.54

Correlation Coefficient

SBI Insurance  Poste Italiane

Very weak diversification

The 3 months correlation between SBI and Poste is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding SBI Insurance Group and Poste Italiane SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poste Italiane SpA 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 Poste Italiane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poste Italiane SpA has no effect on the direction of SBI Insurance i.e., SBI Insurance and Poste Italiane go up and down completely randomly.

Pair Corralation between SBI Insurance and Poste Italiane

Assuming the 90 days trading horizon SBI Insurance is expected to generate 33.28 times less return on investment than Poste Italiane. In addition to that, SBI Insurance is 1.62 times more volatile than Poste Italiane SpA. It trades about 0.0 of its total potential returns per unit of risk. Poste Italiane SpA is currently generating about 0.09 per unit of volatility. If you would invest  869.00  in Poste Italiane SpA on October 25, 2024 and sell it today you would earn a total of  566.00  from holding Poste Italiane SpA or generate 65.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

SBI Insurance Group  vs.  Poste Italiane SpA

SBI Insurance Group

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SBI Insurance Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SBI Insurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Poste Italiane SpA

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Poste Italiane SpA are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Poste Italiane reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SBI Insurance and Poste Italiane

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

The idea behind SBI Insurance Group and Poste Italiane SpA 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.