Correlation Between State Bank and Oceaneering International
Can any of the company-specific risk be diversified away by investing in both State Bank and Oceaneering International 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 State Bank and Oceaneering International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Bank of and Oceaneering International, you can compare the effects of market volatilities on State Bank and Oceaneering International 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 State Bank with a short position of Oceaneering International. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Oceaneering International.
Diversification Opportunities for State Bank and Oceaneering International
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between State and Oceaneering is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Oceaneering International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceaneering International and State 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 State Bank of are associated (or correlated) with Oceaneering International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceaneering International has no effect on the direction of State Bank i.e., State Bank and Oceaneering International go up and down completely randomly.
Pair Corralation between State Bank and Oceaneering International
Assuming the 90 days trading horizon State Bank of is expected to generate 0.67 times more return on investment than Oceaneering International. However, State Bank of is 1.49 times less risky than Oceaneering International. It trades about 0.06 of its potential returns per unit of risk. Oceaneering International is currently generating about -0.07 per unit of risk. If you would invest 10,020 in State Bank of on September 12, 2024 and sell it today you would earn a total of 200.00 from holding State Bank of or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Bank of vs. Oceaneering International
Performance |
| Timeline |
| State Bank |
| Oceaneering International |
State Bank and Oceaneering International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and Oceaneering International
The main advantage of trading using opposite State Bank and Oceaneering International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, Oceaneering International 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 Oceaneering International will offset losses from the drop in Oceaneering International's long position.| State Bank vs. Cizzle Biotechnology Holdings | State Bank vs. Jupiter Fund Management | State Bank vs. Caledonia Mining | State Bank vs. BW Offshore |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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