Correlation Between Indutrade and State Bank
Can any of the company-specific risk be diversified away by investing in both Indutrade and State 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 Indutrade and State Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indutrade AB and State Bank of, you can compare the effects of market volatilities on Indutrade and State 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 Indutrade with a short position of State Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indutrade and State Bank.
Diversification Opportunities for Indutrade and State Bank
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Indutrade and State is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Indutrade AB and State Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Bank and Indutrade 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 Indutrade AB are associated (or correlated) with State Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Bank has no effect on the direction of Indutrade i.e., Indutrade and State Bank go up and down completely randomly.
Pair Corralation between Indutrade and State Bank
Assuming the 90 days trading horizon Indutrade is expected to generate 3.33 times less return on investment than State Bank. In addition to that, Indutrade is 1.0 times more volatile than State Bank of. It trades about 0.02 of its total potential returns per unit of risk. State Bank of is currently generating about 0.06 per unit of volatility. If you would invest 7,013 in State Bank of on August 31, 2024 and sell it today you would earn a total of 2,957 from holding State Bank of or generate 42.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Indutrade AB vs. State Bank of
Performance |
| Timeline |
| Indutrade AB |
| State Bank |
Indutrade and State Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indutrade and State Bank
The main advantage of trading using opposite Indutrade and State Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indutrade position performs unexpectedly, State 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 State Bank will offset losses from the drop in State Bank's long position.| Indutrade vs. Neometals | Indutrade vs. Coor Service Management | Indutrade vs. Aeorema Communications Plc | Indutrade vs. JLEN Environmental Assets |
| State Bank vs. Advanced Medical Solutions | State Bank vs. Westlake Chemical Corp | State Bank vs. McEwen Mining | State Bank vs. Elmos Semiconductor SE |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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