Correlation Between State Bank and PPHE Hotel
Can any of the company-specific risk be diversified away by investing in both State Bank and PPHE Hotel 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 PPHE Hotel 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 PPHE Hotel Group, you can compare the effects of market volatilities on State Bank and PPHE Hotel 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 PPHE Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and PPHE Hotel.
Diversification Opportunities for State Bank and PPHE Hotel
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between State and PPHE is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and PPHE Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE Hotel Group 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 PPHE Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE Hotel Group has no effect on the direction of State Bank i.e., State Bank and PPHE Hotel go up and down completely randomly.
Pair Corralation between State Bank and PPHE Hotel
Assuming the 90 days trading horizon State Bank of is expected to generate 1.12 times more return on investment than PPHE Hotel. However, State Bank is 1.12 times more volatile than PPHE Hotel Group. It trades about 0.07 of its potential returns per unit of risk. PPHE Hotel Group is currently generating about 0.03 per unit of risk. If you would invest 7,033 in State Bank of on August 28, 2024 and sell it today you would earn a total of 2,927 from holding State Bank of or generate 41.62% 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. PPHE Hotel Group
Performance |
| Timeline |
| State Bank |
| PPHE Hotel Group |
State Bank and PPHE Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and PPHE Hotel
The main advantage of trading using opposite State Bank and PPHE Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, PPHE Hotel 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 PPHE Hotel will offset losses from the drop in PPHE Hotel's long position.| State Bank vs. Abingdon Health Plc | State Bank vs. Lords Grp Trading | State Bank vs. The Mercantile Investment | State Bank vs. Naturhouse Health SA |
| PPHE Hotel vs. Chocoladefabriken Lindt Spruengli | PPHE Hotel vs. National Atomic Co | PPHE Hotel vs. OTP Bank Nyrt | PPHE Hotel vs. Samsung Electronics Co |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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