Correlation Between State Bank and Young Cos
Can any of the company-specific risk be diversified away by investing in both State Bank and Young Cos 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 Young Cos 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 Young Cos Brewery, you can compare the effects of market volatilities on State Bank and Young Cos 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 Young Cos. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Young Cos.
Diversification Opportunities for State Bank and Young Cos
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between State and Young is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Young Cos Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Young Cos Brewery 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 Young Cos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Young Cos Brewery has no effect on the direction of State Bank i.e., State Bank and Young Cos go up and down completely randomly.
Pair Corralation between State Bank and Young Cos
Assuming the 90 days trading horizon State Bank of is expected to generate 0.84 times more return on investment than Young Cos. However, State Bank of is 1.19 times less risky than Young Cos. It trades about 0.04 of its potential returns per unit of risk. Young Cos Brewery is currently generating about 0.01 per unit of risk. If you would invest 7,211 in State Bank of on August 25, 2024 and sell it today you would earn a total of 2,439 from holding State Bank of or generate 33.82% 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. Young Cos Brewery
Performance |
| Timeline |
| State Bank |
| Young Cos Brewery |
State Bank and Young Cos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and Young Cos
The main advantage of trading using opposite State Bank and Young Cos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, Young Cos 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 Young Cos will offset losses from the drop in Young Cos' long position.| State Bank vs. SupplyMe Capital PLC | State Bank vs. Lloyds Banking Group | State Bank vs. SANTANDER UK 8 | State Bank vs. 88 Energy |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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