Correlation Between Sanasa Development and Softlogic Life

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

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

Diversification Opportunities for Sanasa Development and Softlogic Life

0.39

Correlation Coefficient

Sanasa Development  Softlogic Life

Weak diversification

The 3 months correlation between Sanasa and Softlogic is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sanasa Development Bank and Softlogic Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Softlogic Life Insurance and Sanasa Development 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 Sanasa Development Bank are associated (or correlated) with Softlogic Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Softlogic Life Insurance has no effect on the direction of Sanasa Development i.e., Sanasa Development and Softlogic Life go up and down completely randomly.

Pair Corralation between Sanasa Development and Softlogic Life

Assuming the 90 days trading horizon Sanasa Development Bank is expected to under-perform the Softlogic Life. In addition to that, Sanasa Development is 1.36 times more volatile than Softlogic Life Insurance. It trades about -0.05 of its total potential returns per unit of risk. Softlogic Life Insurance is currently generating about 0.03 per unit of volatility. If you would invest  7,120  in Softlogic Life Insurance on December 27, 2024 and sell it today you would earn a total of  190.00  from holding Softlogic Life Insurance or generate 2.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sanasa Development Bank  vs.  Softlogic Life Insurance

Sanasa Development Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sanasa Development Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Softlogic Life Insurance

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Softlogic Life Insurance are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Softlogic Life is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sanasa Development and Softlogic Life

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

The idea behind Sanasa Development Bank and Softlogic Life Insurance 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.