Correlation Between Sabre Insurance and Pharol SGPS

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

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

Diversification Opportunities for Sabre Insurance and Pharol SGPS

0.0

Correlation Coefficient

Sabre Insurance  Pharol SGPS

Pay attention - limited upside

The 3 months correlation between Sabre and Pharol is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance Group and Pharol SGPS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharol SGPS SA and Sabre 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 Sabre Insurance Group are associated (or correlated) with Pharol SGPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharol SGPS SA has no effect on the direction of Sabre Insurance i.e., Sabre Insurance and Pharol SGPS go up and down completely randomly.

Pair Corralation between Sabre Insurance and Pharol SGPS

Assuming the 90 days horizon Sabre Insurance Group is expected to generate 0.07 times more return on investment than Pharol SGPS. However, Sabre Insurance Group is 13.93 times less risky than Pharol SGPS. It trades about 0.09 of its potential returns per unit of risk. Pharol SGPS SA is currently generating about -0.17 per unit of risk. If you would invest  495.00  in Sabre Insurance Group on September 16, 2024 and sell it today you would earn a total of  9.00  from holding Sabre Insurance Group or generate 1.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

Sabre Insurance Group  vs.  Pharol SGPS SA

Sabre Insurance Group

Risk-Adjusted Performance

0 of 100

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 fairly strong technical and fundamental indicators, Sabre Insurance is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pharol SGPS SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pharol SGPS SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Sabre Insurance and Pharol SGPS

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

The idea behind Sabre Insurance Group and Pharol SGPS SA 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.