Correlation Between SBI Insurance and T MOBILE

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

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

Diversification Opportunities for SBI Insurance and T MOBILE

0.56

Correlation Coefficient

SBI Insurance  T MOBILE

Very weak diversification

The 3 months correlation between SBI and TM5 is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding SBI Insurance Group and T MOBILE US in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T MOBILE US and SBI Insurance 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 Insurance Group are associated (or correlated) with T MOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T MOBILE US has no effect on the direction of SBI Insurance i.e., SBI Insurance and T MOBILE go up and down completely randomly.

Pair Corralation between SBI Insurance and T MOBILE

Assuming the 90 days trading horizon SBI Insurance Group is expected to generate 1.18 times more return on investment than T MOBILE. However, SBI Insurance is 1.18 times more volatile than T MOBILE US. It trades about 0.07 of its potential returns per unit of risk. T MOBILE US is currently generating about -0.29 per unit of risk. If you would invest  605.00  in SBI Insurance Group on September 30, 2024 and sell it today you would earn a total of  15.00  from holding SBI Insurance Group or generate 2.48% return on investment over 90 days.

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

SBI Insurance Group  vs.  T MOBILE US

SBI Insurance Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SBI Insurance Group are ranked lower than 8 (%) 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.

T MOBILE US

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with SBI Insurance and T MOBILE

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

The idea behind SBI Insurance Group and T MOBILE US 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.