Correlation Between T-MOBILE and SBI Insurance

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

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

Diversification Opportunities for T-MOBILE and SBI Insurance

0.54

Correlation Coefficient

T-MOBILE  SBI Insurance

Very weak diversification

The 3 months correlation between T-MOBILE and SBI is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding T MOBILE US and SBI Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Insurance Group and T-MOBILE 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 T MOBILE US are associated (or correlated) with SBI Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Insurance Group has no effect on the direction of T-MOBILE i.e., T-MOBILE and SBI Insurance go up and down completely randomly.

Pair Corralation between T-MOBILE and SBI Insurance

Assuming the 90 days trading horizon T-MOBILE is expected to generate 1.16 times less return on investment than SBI Insurance. But when comparing it to its historical volatility, T MOBILE US is 1.05 times less risky than SBI Insurance. It trades about 0.13 of its potential returns per unit of risk. SBI Insurance Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  560.00  in SBI Insurance Group on October 5, 2024 and sell it today you would earn a total of  85.00  from holding SBI Insurance Group or generate 15.18% return on investment over 90 days.

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

T MOBILE US  vs.  SBI Insurance Group

T MOBILE US

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days T MOBILE US has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively fragile basic indicators, T-MOBILE unveiled solid returns over the last few months and may actually be approaching a breakup point.

SBI Insurance Group

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days SBI Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, SBI Insurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with T-MOBILE and SBI Insurance

The main advantage of trading using opposite T-MOBILE and SBI Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T-MOBILE position performs unexpectedly, SBI Insurance 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 SBI Insurance will offset losses from the drop in SBI Insurance's long position.

The idea behind T MOBILE US and SBI Insurance Group 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 Global Correlations module to find global opportunities by holding instruments from different markets.