Correlation Between Sabre Insurance and Caledonia Mining

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

Diversification Opportunities for Sabre Insurance and Caledonia Mining

0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between Sabre and Caledonia is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance Group and Caledonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caledonia Mining 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 Caledonia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caledonia Mining has no effect on the direction of Sabre Insurance i.e., Sabre Insurance and Caledonia Mining go up and down completely randomly.

Pair Corralation between Sabre Insurance and Caledonia Mining

Assuming the 90 days trading horizon Sabre Insurance Group is expected to generate 0.8 times more return on investment than Caledonia Mining. However, Sabre Insurance Group is 1.25 times less risky than Caledonia Mining. It trades about 0.01 of its potential returns per unit of risk. Caledonia Mining is currently generating about 0.0 per unit of risk. If you would invest  13,565  in Sabre Insurance Group on September 14, 2024 and sell it today you would earn a total of  115.00  from holding Sabre Insurance Group or generate 0.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Sabre Insurance Group  vs.  Caledonia Mining

 Performance 
       Timeline  
Sabre Insurance Group 

Risk-Adjusted Performance

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Weak
 
Strong
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 comparatively stable basic indicators, Sabre Insurance is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
Caledonia Mining 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Caledonia Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Sabre Insurance and Caledonia Mining Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sabre Insurance and Caledonia Mining

The main advantage of trading using opposite Sabre Insurance and Caledonia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabre Insurance position performs unexpectedly, Caledonia Mining 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 Caledonia Mining will offset losses from the drop in Caledonia Mining's long position.
The idea behind Sabre Insurance Group and Caledonia Mining 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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