Correlation Between Sabre Insurance and United Guardian

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

Diversification Opportunities for Sabre Insurance and United Guardian

0.0

Correlation Coefficient

Sabre Insurance  United Guardian

Pay attention - limited upside

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

Pair Corralation between Sabre Insurance and United Guardian

Assuming the 90 days horizon Sabre Insurance Group is expected to under-perform the United Guardian. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sabre Insurance Group is 1.23 times less risky than United Guardian. The pink sheet trades about -0.03 of its potential returns per unit of risk. The United Guardian is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,053  in United Guardian on October 4, 2024 and sell it today you would lose (97.00) from holding United Guardian or give up 9.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Sabre Insurance Group  vs.  United Guardian

Sabre Insurance Group

Risk-Adjusted Performance

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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 newest stock price disturbance, may contribute to short-term losses for the investors.

United Guardian

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Guardian 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 technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Sabre Insurance and United Guardian

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

The idea behind Sabre Insurance Group and United Guardian 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.