Correlation Between X FAB and SBI Insurance

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

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

Diversification Opportunities for X FAB and SBI Insurance

-0.46

Correlation Coefficient

X FAB  SBI Insurance

Very good diversification

The 3 months correlation between XFB and SBI is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries 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 X FAB 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 X FAB Silicon Foundries 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 X FAB i.e., X FAB and SBI Insurance go up and down completely randomly.

Pair Corralation between X FAB and SBI Insurance

Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the SBI Insurance. In addition to that, X FAB is 1.78 times more volatile than SBI Insurance Group. It trades about -0.02 of its total potential returns per unit of risk. SBI Insurance Group is currently generating about 0.15 per unit of volatility. If you would invest  605.00  in SBI Insurance Group on December 21, 2024 and sell it today you would earn a total of  85.00  from holding SBI Insurance Group or generate 14.05% return on investment over 90 days.

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

X FAB Silicon Foundries  vs.  SBI Insurance Group

X FAB Silicon

Risk-Adjusted Performance

Very Weak

Over the last 90 days X FAB Silicon Foundries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, X FAB is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

SBI Insurance Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SBI Insurance Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, SBI Insurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with X FAB and SBI Insurance

The main advantage of trading using opposite X FAB and SBI Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB 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 X FAB Silicon Foundries 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.