Correlation Between Power Finance and State Bank
Can any of the company-specific risk be diversified away by investing in both Power Finance 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 Power Finance and State Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Finance and State Bank of, you can compare the effects of market volatilities on Power Finance 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 Power Finance with a short position of State Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Finance and State Bank.
Diversification Opportunities for Power Finance and State Bank
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Power and State is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Power Finance and State Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Bank and Power Finance 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 Power Finance 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 Power Finance i.e., Power Finance and State Bank go up and down completely randomly.
Pair Corralation between Power Finance and State Bank
Assuming the 90 days trading horizon Power Finance is expected to under-perform the State Bank. In addition to that, Power Finance is 2.12 times more volatile than State Bank of. It trades about -0.11 of its total potential returns per unit of risk. State Bank of is currently generating about -0.11 per unit of volatility. If you would invest 80,120 in State Bank of on November 3, 2024 and sell it today you would lose (2,830) from holding State Bank of or give up 3.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Finance vs. State Bank of
Performance |
| Timeline |
| Power Finance |
| State Bank |
Power Finance and State Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Finance and State Bank
The main advantage of trading using opposite Power Finance and State Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Finance 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.| Power Finance vs. Kotak Mahindra Bank | Power Finance vs. The Investment Trust | Power Finance vs. Karur Vysya Bank | Power Finance vs. Mask Investments Limited |
| State Bank vs. Tamilnadu Telecommunication Limited | State Bank vs. Mangalore Chemicals Fertilizers | State Bank vs. Ortel Communications Limited | State Bank vs. Paramount Communications Limited |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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