Correlation Between State Bank and Aditya Birla
Can any of the company-specific risk be diversified away by investing in both State Bank and Aditya Birla 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 Aditya Birla 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 Aditya Birla Fashion, you can compare the effects of market volatilities on State Bank and Aditya Birla 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 Aditya Birla. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Aditya Birla.
Diversification Opportunities for State Bank and Aditya Birla
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between State and Aditya is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Aditya Birla Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aditya Birla Fashion 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 Aditya Birla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aditya Birla Fashion has no effect on the direction of State Bank i.e., State Bank and Aditya Birla go up and down completely randomly.
Pair Corralation between State Bank and Aditya Birla
Assuming the 90 days trading horizon State Bank is expected to generate 1.08 times less return on investment than Aditya Birla. But when comparing it to its historical volatility, State Bank of is 1.26 times less risky than Aditya Birla. It trades about 0.04 of its potential returns per unit of risk. Aditya Birla Fashion is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 30,500 in Aditya Birla Fashion on September 3, 2024 and sell it today you would earn a total of 1,720 from holding Aditya Birla Fashion or generate 5.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Bank of vs. Aditya Birla Fashion
Performance |
| Timeline |
| State Bank |
| Aditya Birla Fashion |
State Bank and Aditya Birla Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and Aditya Birla
The main advantage of trading using opposite State Bank and Aditya Birla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, Aditya Birla 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 Aditya Birla will offset losses from the drop in Aditya Birla's long position.| State Bank vs. Sonata Software Limited | State Bank vs. Sarveshwar Foods Limited | State Bank vs. Agro Tech Foods | State Bank vs. Tamilnadu Telecommunication Limited |
| Aditya Birla vs. Gujarat Fluorochemicals Limited | Aditya Birla vs. Oriental Hotels Limited | Aditya Birla vs. Ortel Communications Limited | Aditya Birla vs. Krebs Biochemicals and |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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