Correlation Between APPLIED MATERIALS and SBI Insurance

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

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

Diversification Opportunities for APPLIED MATERIALS and SBI Insurance

-0.43

Correlation Coefficient

APPLIED MATERIALS  SBI Insurance

Very good diversification

The 3 months correlation between APPLIED and SBI is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS 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 APPLIED MATERIALS 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 APPLIED MATERIALS 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 APPLIED MATERIALS i.e., APPLIED MATERIALS and SBI Insurance go up and down completely randomly.

Pair Corralation between APPLIED MATERIALS and SBI Insurance

Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 8.23 times less return on investment than SBI Insurance. In addition to that, APPLIED MATERIALS is 1.84 times more volatile than SBI Insurance Group. It trades about 0.01 of its total potential returns per unit of risk. SBI Insurance Group is currently generating about 0.12 per unit of volatility. If you would invest  565.00  in SBI Insurance Group on September 12, 2024 and sell it today you would earn a total of  60.00  from holding SBI Insurance Group or generate 10.62% return on investment over 90 days.

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

APPLIED MATERIALS  vs.  SBI Insurance Group

APPLIED MATERIALS

Risk-Adjusted Performance

0 of 100

Very Weak

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

SBI Insurance Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SBI Insurance Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SBI Insurance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with APPLIED MATERIALS and SBI Insurance

The main advantage of trading using opposite APPLIED MATERIALS and SBI Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS 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 APPLIED MATERIALS 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.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.