Correlation Between State Bank and Bombay Burmah
Can any of the company-specific risk be diversified away by investing in both State Bank and Bombay Burmah 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 Bombay Burmah 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 Bombay Burmah Trading, you can compare the effects of market volatilities on State Bank and Bombay Burmah 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 Bombay Burmah. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Bombay Burmah.
Diversification Opportunities for State Bank and Bombay Burmah
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between State and Bombay is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Bombay Burmah Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bombay Burmah Trading 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 Bombay Burmah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bombay Burmah Trading has no effect on the direction of State Bank i.e., State Bank and Bombay Burmah go up and down completely randomly.
Pair Corralation between State Bank and Bombay Burmah
Assuming the 90 days trading horizon State Bank of is expected to generate 1.05 times more return on investment than Bombay Burmah. However, State Bank is 1.05 times more volatile than Bombay Burmah Trading. It trades about 0.13 of its potential returns per unit of risk. Bombay Burmah Trading is currently generating about -0.34 per unit of risk. If you would invest 82,670 in State Bank of on September 13, 2024 and sell it today you would earn a total of 3,490 from holding State Bank of or generate 4.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Bank of vs. Bombay Burmah Trading
Performance |
| Timeline |
| State Bank |
| Bombay Burmah Trading |
State Bank and Bombay Burmah Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and Bombay Burmah
The main advantage of trading using opposite State Bank and Bombay Burmah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, Bombay Burmah 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 Bombay Burmah will offset losses from the drop in Bombay Burmah's long position.| State Bank vs. Reliance Industries Limited | State Bank vs. Oil Natural Gas | State Bank vs. ICICI Bank Limited |
| Bombay Burmah vs. State Bank of | Bombay Burmah vs. Life Insurance | Bombay Burmah vs. HDFC Bank Limited | Bombay Burmah vs. ICICI Bank Limited |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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