Correlation Between Sabvest Capital and Life Healthcare

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

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

Diversification Opportunities for Sabvest Capital and Life Healthcare

-0.16

Correlation Coefficient

Sabvest Capital  Life Healthcare

Good diversification

The 3 months correlation between Sabvest and Life is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sabvest Capital and Life Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Healthcare and Sabvest Capital 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 Sabvest Capital are associated (or correlated) with Life Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Healthcare has no effect on the direction of Sabvest Capital i.e., Sabvest Capital and Life Healthcare go up and down completely randomly.

Pair Corralation between Sabvest Capital and Life Healthcare

Assuming the 90 days trading horizon Sabvest Capital is expected to generate 1.58 times more return on investment than Life Healthcare. However, Sabvest Capital is 1.58 times more volatile than Life Healthcare. It trades about 0.12 of its potential returns per unit of risk. Life Healthcare is currently generating about -0.08 per unit of risk. If you would invest  820,200  in Sabvest Capital on October 21, 2024 and sell it today you would earn a total of  149,800  from holding Sabvest Capital or generate 18.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sabvest Capital  vs.  Life Healthcare

Sabvest Capital

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sabvest Capital are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sabvest Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Life Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Life Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Sabvest Capital and Life Healthcare

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

The idea behind Sabvest Capital and Life Healthcare 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.