Correlation Between SBI Life and CSB Bank

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

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

Diversification Opportunities for SBI Life and CSB Bank

0.32

Correlation Coefficient

SBI Life  CSB Bank

Weak diversification

The 3 months correlation between SBI and CSB is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding SBI Life Insurance and CSB Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSB Bank Limited and SBI 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 SBI Life Insurance are associated (or correlated) with CSB Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSB Bank Limited has no effect on the direction of SBI Life i.e., SBI Life and CSB Bank go up and down completely randomly.

Pair Corralation between SBI Life and CSB Bank

Assuming the 90 days trading horizon SBI Life is expected to generate 1.41 times less return on investment than CSB Bank. But when comparing it to its historical volatility, SBI Life Insurance is 1.14 times less risky than CSB Bank. It trades about 0.15 of its potential returns per unit of risk. CSB Bank Limited is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  36,300  in CSB Bank Limited on April 24, 2025 and sell it today you would earn a total of  6,580  from holding CSB Bank Limited or generate 18.13% return on investment over 90 days.

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

SBI Life Insurance  vs.  CSB Bank Limited

SBI Life Insurance

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SBI Life Insurance are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, SBI Life may actually be approaching a critical reversion point that can send shares even higher in August 2025.

CSB Bank Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CSB Bank Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, CSB Bank disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SBI Life and CSB Bank

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

The idea behind SBI Life Insurance and CSB Bank Limited 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.