Correlation Between State Bank and Computer Age
Can any of the company-specific risk be diversified away by investing in both State Bank and Computer Age 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 Computer Age 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 Computer Age Management, you can compare the effects of market volatilities on State Bank and Computer Age 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 Computer Age. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Computer Age.
Diversification Opportunities for State Bank and Computer Age
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between State and Computer is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Computer Age Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer Age Management 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 Computer Age. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer Age Management has no effect on the direction of State Bank i.e., State Bank and Computer Age go up and down completely randomly.
Pair Corralation between State Bank and Computer Age
Assuming the 90 days trading horizon State Bank is expected to generate 1.6 times less return on investment than Computer Age. But when comparing it to its historical volatility, State Bank of is 1.36 times less risky than Computer Age. It trades about 0.09 of its potential returns per unit of risk. Computer Age Management is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 272,204 in Computer Age Management on September 23, 2024 and sell it today you would earn a total of 222,896 from holding Computer Age Management or generate 81.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
State Bank of vs. Computer Age Management
Performance |
| Timeline |
| State Bank |
| Computer Age Management |
State Bank and Computer Age Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and Computer Age
The main advantage of trading using opposite State Bank and Computer Age positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, Computer Age 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 Computer Age will offset losses from the drop in Computer Age's long position.| State Bank vs. Kingfa Science Technology | State Bank vs. Rico Auto Industries | State Bank vs. GACM Technologies Limited | State Bank vs. COSMO FIRST LIMITED |
| Computer Age vs. State Bank of | Computer Age vs. Life Insurance | Computer Age vs. HDFC Bank Limited | Computer Age 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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