Correlation Between State Bank and Light Science
Can any of the company-specific risk be diversified away by investing in both State Bank and Light Science 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 Light Science 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 Light Science Technologies, you can compare the effects of market volatilities on State Bank and Light Science 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 Light Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Light Science.
Diversification Opportunities for State Bank and Light Science
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between State and Light is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Light Science Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Light Science Techno 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 Light Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Light Science Techno has no effect on the direction of State Bank i.e., State Bank and Light Science go up and down completely randomly.
Pair Corralation between State Bank and Light Science
Assuming the 90 days trading horizon State Bank of is expected to generate 0.58 times more return on investment than Light Science. However, State Bank of is 1.72 times less risky than Light Science. It trades about -0.22 of its potential returns per unit of risk. Light Science Technologies is currently generating about -0.32 per unit of risk. If you would invest 9,220 in State Bank of on October 29, 2024 and sell it today you would lose (630.00) from holding State Bank of or give up 6.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Bank of vs. Light Science Technologies
Performance |
| Timeline |
| State Bank |
| Light Science Techno |
State Bank and Light Science Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and Light Science
The main advantage of trading using opposite State Bank and Light Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, Light Science 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 Light Science will offset losses from the drop in Light Science's long position.| State Bank vs. Gaztransport et Technigaz | State Bank vs. Pets at Home | State Bank vs. Trainline Plc | State Bank vs. Synthomer plc |
| Light Science vs. Grieg Seafood | Light Science vs. Golden Metal Resources | Light Science vs. Bell Food Group | Light Science vs. Edita Food Industries |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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