Correlation Between Infosys and State Bank
Can any of the company-specific risk be diversified away by investing in both Infosys 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 Infosys and State Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Infosys Limited and State Bank of, you can compare the effects of market volatilities on Infosys 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 Infosys with a short position of State Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infosys and State Bank.
Diversification Opportunities for Infosys and State Bank
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Infosys and State is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Limited and State Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Bank and Infosys 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 Infosys Limited 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 Infosys i.e., Infosys and State Bank go up and down completely randomly.
Pair Corralation between Infosys and State Bank
Assuming the 90 days trading horizon Infosys is expected to generate 1.33 times less return on investment than State Bank. But when comparing it to its historical volatility, Infosys Limited is 1.31 times less risky than State Bank. It trades about 0.14 of its potential returns per unit of risk. State Bank of is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 79,205 in State Bank of on August 29, 2024 and sell it today you would earn a total of 4,735 from holding State Bank of or generate 5.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Infosys Limited vs. State Bank of
Performance |
| Timeline |
| Infosys Limited |
| State Bank |
Infosys and State Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Infosys and State Bank
The main advantage of trading using opposite Infosys and State Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infosys 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.| Infosys vs. Sarthak Metals Limited | Infosys vs. Alkali Metals Limited | Infosys vs. Rajnandini Metal Limited | Infosys vs. Hisar Metal Industries |
| State Bank vs. MRF Limited | State Bank vs. JSW Holdings Limited | State Bank vs. Maharashtra Scooters Limited | State Bank vs. Nalwa Sons Investments |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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