Correlation Between SBI Life and Global Education

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

Diversification Opportunities for SBI Life and Global Education

0.61

Correlation Coefficient

SBI Life  Global Education

Poor diversification

The 3 months correlation between SBI and Global is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding SBI Life Insurance and Global Education Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Education 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 Global Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Education has no effect on the direction of SBI Life i.e., SBI Life and Global Education go up and down completely randomly.

Pair Corralation between SBI Life and Global Education

Assuming the 90 days trading horizon SBI Life Insurance is expected to under-perform the Global Education. But the stock apears to be less risky and, when comparing its historical volatility, SBI Life Insurance is 1.88 times less risky than Global Education. The stock trades about -0.28 of its potential returns per unit of risk. The Global Education Limited is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  19,798  in Global Education Limited on August 31, 2024 and sell it today you would lose (610.00) from holding Global Education Limited or give up 3.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

SBI Life Insurance  vs.  Global Education Limited

SBI Life Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SBI Life Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Global Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Education Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Global Education is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SBI Life and Global Education

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

The idea behind SBI Life Insurance and Global Education Limited 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.