Correlation Between SBI Life and APL Apollo

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

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

Diversification Opportunities for SBI Life and APL Apollo

-0.02

Correlation Coefficient

SBI Life  APL Apollo

Good diversification

The 3 months correlation between SBI and APL is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding SBI Life Insurance and APL Apollo Tubes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APL Apollo Tubes and SBI Life 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 Life Insurance are associated (or correlated) with APL Apollo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APL Apollo Tubes has no effect on the direction of SBI Life i.e., SBI Life and APL Apollo go up and down completely randomly.

Pair Corralation between SBI Life and APL Apollo

Assuming the 90 days trading horizon SBI Life Insurance is expected to generate 0.61 times more return on investment than APL Apollo. However, SBI Life Insurance is 1.64 times less risky than APL Apollo. It trades about 0.14 of its potential returns per unit of risk. APL Apollo Tubes is currently generating about 0.03 per unit of risk. If you would invest  138,437  in SBI Life Insurance on December 25, 2024 and sell it today you would earn a total of  18,543  from holding SBI Life Insurance or generate 13.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

SBI Life Insurance  vs.  APL Apollo Tubes

SBI Life Insurance

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SBI Life Insurance are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, SBI Life exhibited solid returns over the last few months and may actually be approaching a breakup point.

APL Apollo Tubes

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in APL Apollo Tubes are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, APL Apollo is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with SBI Life and APL Apollo

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

The idea behind SBI Life Insurance and APL Apollo Tubes 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.