Correlation Between SBI Insurance and PARKEN Sport

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

Diversification Opportunities for SBI Insurance and PARKEN Sport

0.55

Correlation Coefficient

SBI Insurance  PARKEN Sport

Very weak diversification

The 3 months correlation between SBI and PARKEN is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding SBI Insurance Group and PARKEN Sport Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PARKEN Sport Enterta 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 PARKEN Sport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PARKEN Sport Enterta has no effect on the direction of SBI Insurance i.e., SBI Insurance and PARKEN Sport go up and down completely randomly.

Pair Corralation between SBI Insurance and PARKEN Sport

Assuming the 90 days trading horizon SBI Insurance is expected to generate 28.9 times less return on investment than PARKEN Sport. But when comparing it to its historical volatility, SBI Insurance Group is 4.34 times less risky than PARKEN Sport. It trades about 0.01 of its potential returns per unit of risk. PARKEN Sport Entertainment is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  745.00  in PARKEN Sport Entertainment on October 5, 2024 and sell it today you would earn a total of  970.00  from holding PARKEN Sport Entertainment or generate 130.2% return on investment over 90 days.

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

SBI Insurance Group  vs.  PARKEN Sport Entertainment

SBI Insurance Group

Risk-Adjusted Performance

0 of 100

Good

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 uncertain basic indicators, SBI Insurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

PARKEN Sport Enterta

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days PARKEN Sport Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, PARKEN Sport reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SBI Insurance and PARKEN Sport

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

The idea behind SBI Insurance Group and PARKEN Sport Entertainment 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.