Correlation Between Pekin Life and Sabre Insurance

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

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

Diversification Opportunities for Pekin Life and Sabre Insurance

-0.09

Correlation Coefficient

Pekin Life  Sabre Insurance

Good diversification

The 3 months correlation between Pekin and Sabre is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Pekin Life Insurance and Sabre Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre Insurance Group and Pekin Life 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 Pekin Life Insurance are associated (or correlated) with Sabre Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre Insurance Group has no effect on the direction of Pekin Life i.e., Pekin Life and Sabre Insurance go up and down completely randomly.

Pair Corralation between Pekin Life and Sabre Insurance

Given the investment horizon of 90 days Pekin Life is expected to generate 20.64 times less return on investment than Sabre Insurance. But when comparing it to its historical volatility, Pekin Life Insurance is 5.04 times less risky than Sabre Insurance. It trades about 0.03 of its potential returns per unit of risk. Sabre Insurance Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  495.00  in Sabre Insurance Group on August 21, 2024 and sell it today you would earn a total of  9.00  from holding Sabre Insurance Group or generate 1.82% return on investment over 90 days.

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

Pekin Life Insurance  vs.  Sabre Insurance Group

Pekin Life Insurance

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pekin Life Insurance are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Pekin Life is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Sabre Insurance Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sabre Insurance Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Sabre Insurance is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pekin Life and Sabre Insurance

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

The idea behind Pekin Life Insurance and Sabre 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.