Correlation Between PureTech Health and Sabre Insurance

Can any of the company-specific risk be diversified away by investing in both PureTech Health and Sabre Insurance 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 PureTech Health and Sabre Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PureTech Health plc and Sabre Insurance Group, you can compare the effects of market volatilities on PureTech Health and Sabre Insurance 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 PureTech Health with a short position of Sabre Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of PureTech Health and Sabre Insurance.

Diversification Opportunities for PureTech Health and Sabre Insurance

0.7

Correlation Coefficient

PureTech Health  Sabre Insurance

Poor diversification

The 3 months correlation between PureTech and Sabre is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding PureTech Health plc and Sabre Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre Insurance Group and PureTech Health 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 PureTech Health plc are associated (or correlated) with Sabre Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre Insurance Group has no effect on the direction of PureTech Health i.e., PureTech Health and Sabre Insurance go up and down completely randomly.

Pair Corralation between PureTech Health and Sabre Insurance

Assuming the 90 days trading horizon PureTech Health plc is expected to under-perform the Sabre Insurance. In addition to that, PureTech Health is 1.24 times more volatile than Sabre Insurance Group. It trades about -0.16 of its total potential returns per unit of risk. Sabre Insurance Group is currently generating about -0.1 per unit of volatility. If you would invest  13,780  in Sabre Insurance Group on December 23, 2024 and sell it today you would lose (1,260) from holding Sabre Insurance Group or give up 9.14% of portfolio value over 90 days.

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

PureTech Health plc  vs.  Sabre Insurance Group

PureTech Health plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days PureTech Health plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Sabre Insurance Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sabre Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with PureTech Health and Sabre Insurance

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

The idea behind PureTech Health plc and Sabre Insurance Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.