Correlation Between Ravi Kumar and SBI Life

Can any of the company-specific risk be diversified away by investing in both Ravi Kumar and SBI Life 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 Ravi Kumar and SBI Life into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ravi Kumar Distilleries and SBI Life Insurance, you can compare the effects of market volatilities on Ravi Kumar and SBI Life 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 Ravi Kumar with a short position of SBI Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ravi Kumar and SBI Life.

Diversification Opportunities for Ravi Kumar and SBI Life

-0.21

Correlation Coefficient

Ravi Kumar  SBI Life

Very good diversification

The 3 months correlation between Ravi and SBI is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ravi Kumar Distilleries and SBI Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Life Insurance and Ravi Kumar 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 Ravi Kumar Distilleries are associated (or correlated) with SBI Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Life Insurance has no effect on the direction of Ravi Kumar i.e., Ravi Kumar and SBI Life go up and down completely randomly.

Pair Corralation between Ravi Kumar and SBI Life

Assuming the 90 days trading horizon Ravi Kumar Distilleries is expected to under-perform the SBI Life. In addition to that, Ravi Kumar is 1.97 times more volatile than SBI Life Insurance. It trades about -0.06 of its total potential returns per unit of risk. SBI Life Insurance is currently generating about 0.11 per unit of volatility. If you would invest  140,263  in SBI Life Insurance on December 23, 2024 and sell it today you would earn a total of  14,377  from holding SBI Life Insurance or generate 10.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Ravi Kumar Distilleries  vs.  SBI Life Insurance

Ravi Kumar Distilleries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ravi Kumar Distilleries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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.

SBI Life Insurance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SBI Life Insurance are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, SBI Life may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ravi Kumar and SBI Life

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

The idea behind Ravi Kumar Distilleries and SBI Life Insurance 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.