Correlation Between SBI Insurance and Consolidated Communications

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

Diversification Opportunities for SBI Insurance and Consolidated Communications

0.62

Correlation Coefficient

SBI Insurance  Consolidated Communications

Poor diversification

The 3 months correlation between SBI and Consolidated is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding SBI Insurance Group and Consolidated Communications Ho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Communications 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 Consolidated Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Communications has no effect on the direction of SBI Insurance i.e., SBI Insurance and Consolidated Communications go up and down completely randomly.

Pair Corralation between SBI Insurance and Consolidated Communications

If you would invest  402.00  in Consolidated Communications Holdings on October 20, 2024 and sell it today you would earn a total of  46.00  from holding Consolidated Communications Holdings or generate 11.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	0.0%
Values	Daily Returns

SBI Insurance Group  vs.  Consolidated Communications Ho

SBI Insurance Group

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days SBI Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, SBI Insurance may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Consolidated Communications

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Consolidated Communications Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Consolidated Communications may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SBI Insurance and Consolidated Communications

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

The idea behind SBI Insurance Group and Consolidated Communications Holdings 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.