Correlation Between SBI Holdings and CLOVER HEALTH

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

By analyzing existing cross correlation between SBI Holdings and CLOVER HEALTH INV, you can compare the effects of market volatilities on SBI Holdings and CLOVER HEALTH 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 SBI Holdings with a short position of CLOVER HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Holdings and CLOVER HEALTH.

Diversification Opportunities for SBI Holdings and CLOVER HEALTH

-0.43

Correlation Coefficient

SBI Holdings  CLOVER HEALTH

Very good diversification

The 3 months correlation between SBI and CLOVER is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding SBI Holdings and CLOVER HEALTH INV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLOVER HEALTH INV and SBI Holdings 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 SBI Holdings are associated (or correlated) with CLOVER HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLOVER HEALTH INV has no effect on the direction of SBI Holdings i.e., SBI Holdings and CLOVER HEALTH go up and down completely randomly.

Pair Corralation between SBI Holdings and CLOVER HEALTH

Assuming the 90 days trading horizon SBI Holdings is expected to generate 5.35 times less return on investment than CLOVER HEALTH. But when comparing it to its historical volatility, SBI Holdings is 2.86 times less risky than CLOVER HEALTH. It trades about 0.04 of its potential returns per unit of risk. CLOVER HEALTH INV is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  121.00  in CLOVER HEALTH INV on October 24, 2024 and sell it today you would earn a total of  263.00  from holding CLOVER HEALTH INV or generate 217.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

SBI Holdings  vs.  CLOVER HEALTH INV

SBI Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SBI Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, SBI Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

CLOVER HEALTH INV

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CLOVER HEALTH INV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CLOVER HEALTH reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SBI Holdings and CLOVER HEALTH

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

The idea behind SBI Holdings and CLOVER HEALTH INV 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.