Correlation Between SBI Insurance and Elixinol Wellness

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

Diversification Opportunities for SBI Insurance and Elixinol Wellness

0.58

Correlation Coefficient

SBI Insurance  Elixinol Wellness

Very weak diversification

The 3 months correlation between SBI and Elixinol is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding SBI Insurance Group and Elixinol Wellness Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elixinol Wellness 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 Elixinol Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elixinol Wellness has no effect on the direction of SBI Insurance i.e., SBI Insurance and Elixinol Wellness go up and down completely randomly.

Pair Corralation between SBI Insurance and Elixinol Wellness

Assuming the 90 days trading horizon SBI Insurance is expected to generate 871.62 times less return on investment than Elixinol Wellness. But when comparing it to its historical volatility, SBI Insurance Group is 41.56 times less risky than Elixinol Wellness. It trades about 0.01 of its potential returns per unit of risk. Elixinol Wellness Limited is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3.20  in Elixinol Wellness Limited on October 3, 2024 and sell it today you would lose (1.00) from holding Elixinol Wellness Limited or give up 31.25% of portfolio value over 90 days.

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

SBI Insurance Group  vs.  Elixinol Wellness Limited

SBI Insurance Group

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SBI Insurance Group are ranked lower than 10 (%) 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.

Elixinol Wellness

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Elixinol Wellness Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Elixinol Wellness reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SBI Insurance and Elixinol Wellness

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

The idea behind SBI Insurance Group and Elixinol Wellness Limited 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.