Correlation Between SBI Life and Multi Commodity

Can any of the company-specific risk be diversified away by investing in both SBI Life and Multi Commodity 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 Multi Commodity 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 Multi Commodity Exchange, you can compare the effects of market volatilities on SBI Life and Multi Commodity 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 Multi Commodity. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Life and Multi Commodity.

Diversification Opportunities for SBI Life and Multi Commodity

0.52

Correlation Coefficient

SBI Life  Multi Commodity

Very weak diversification

The 3 months correlation between SBI and Multi is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding SBI Life Insurance and Multi Commodity Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Commodity Exchange 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 Multi Commodity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Commodity Exchange has no effect on the direction of SBI Life i.e., SBI Life and Multi Commodity go up and down completely randomly.

Pair Corralation between SBI Life and Multi Commodity

Assuming the 90 days trading horizon SBI Life is expected to generate 2.45 times less return on investment than Multi Commodity. But when comparing it to its historical volatility, SBI Life Insurance is 1.86 times less risky than Multi Commodity. It trades about 0.15 of its potential returns per unit of risk. Multi Commodity Exchange is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  622,500  in Multi Commodity Exchange on April 24, 2025 and sell it today you would earn a total of  203,650  from holding Multi Commodity Exchange or generate 32.71% return on investment over 90 days.

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

SBI Life Insurance  vs.  Multi Commodity Exchange

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.

Multi Commodity Exchange

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Commodity Exchange are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Multi Commodity exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SBI Life and Multi Commodity

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

The idea behind SBI Life Insurance and Multi Commodity Exchange 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.