Correlation Between SBI Insurance and Lion One

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

Diversification Opportunities for SBI Insurance and Lion One

0.31

Correlation Coefficient

SBI Insurance  Lion One

Weak diversification

The 3 months correlation between SBI and Lion is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding SBI Insurance Group and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals 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 Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of SBI Insurance i.e., SBI Insurance and Lion One go up and down completely randomly.

Pair Corralation between SBI Insurance and Lion One

Assuming the 90 days trading horizon SBI Insurance is expected to generate 1.01 times less return on investment than Lion One. But when comparing it to its historical volatility, SBI Insurance Group is 4.74 times less risky than Lion One. It trades about 0.17 of its potential returns per unit of risk. Lion One Metals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Lion One Metals on December 2, 2024 and sell it today you would earn a total of  0.00  from holding Lion One Metals or generate 0.0% return on investment over 90 days.

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

SBI Insurance Group  vs.  Lion One Metals

SBI Insurance Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SBI Insurance Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, SBI Insurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Lion One Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lion One Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Lion One is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SBI Insurance and Lion One

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

The idea behind SBI Insurance Group and Lion One Metals 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.