Correlation Between SBI Insurance and ConocoPhillips

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

Diversification Opportunities for SBI Insurance and ConocoPhillips

-0.2

Correlation Coefficient

SBI Insurance  ConocoPhillips

Good diversification

The 3 months correlation between SBI and ConocoPhillips is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding SBI Insurance Group and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips 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 ConocoPhillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConocoPhillips has no effect on the direction of SBI Insurance i.e., SBI Insurance and ConocoPhillips go up and down completely randomly.

Pair Corralation between SBI Insurance and ConocoPhillips

Assuming the 90 days trading horizon SBI Insurance Group is expected to generate 1.1 times more return on investment than ConocoPhillips. However, SBI Insurance is 1.1 times more volatile than ConocoPhillips. It trades about 0.0 of its potential returns per unit of risk. ConocoPhillips is currently generating about -0.01 per unit of risk. If you would invest  720.00  in SBI Insurance Group on October 4, 2024 and sell it today you would lose (80.00) from holding SBI Insurance Group or give up 11.11% of portfolio value over 90 days.

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

SBI Insurance Group  vs.  ConocoPhillips

SBI Insurance Group

Risk-Adjusted Performance

10 of 100

OK

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

ConocoPhillips

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ConocoPhillips has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SBI Insurance and ConocoPhillips

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

The idea behind SBI Insurance Group and ConocoPhillips 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.