Correlation Between Axis Bank and State Bank
Can any of the company-specific risk be diversified away by investing in both Axis Bank 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 Axis Bank and State Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axis Bank Ltd and State Bank of, you can compare the effects of market volatilities on Axis Bank 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 Axis Bank with a short position of State Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axis Bank and State Bank.
Diversification Opportunities for Axis Bank and State Bank
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Axis and State is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Axis Bank Ltd and State Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Bank and Axis Bank 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 Axis Bank Ltd 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 Axis Bank i.e., Axis Bank and State Bank go up and down completely randomly.
Pair Corralation between Axis Bank and State Bank
Assuming the 90 days trading horizon Axis Bank Ltd is expected to under-perform the State Bank. But the stock apears to be less risky and, when comparing its historical volatility, Axis Bank Ltd is 1.22 times less risky than State Bank. The stock trades about -0.11 of its potential returns per unit of risk. The State Bank of is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 9,310 in State Bank of on August 30, 2024 and sell it today you would earn a total of 570.00 from holding State Bank of or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axis Bank Ltd vs. State Bank of
Performance |
| Timeline |
| Axis Bank |
| State Bank |
Axis Bank and State Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axis Bank and State Bank
The main advantage of trading using opposite Axis Bank and State Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axis Bank 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.| Axis Bank vs. State Bank of | Axis Bank vs. Reliance Industries Limited | Axis Bank vs. Larsen Toubro Limited | Axis Bank vs. Tata Steel Limited |
| State Bank vs. Axfood AB | State Bank vs. Playtech Plc | State Bank vs. Gaming Realms plc | State Bank vs. Wheaton Precious Metals |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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