Correlation Between State Bank and Cambridge Technology
Can any of the company-specific risk be diversified away by investing in both State Bank and Cambridge Technology 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 Cambridge Technology 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 Cambridge Technology Enterprises, you can compare the effects of market volatilities on State Bank and Cambridge Technology 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 Cambridge Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Cambridge Technology.
Diversification Opportunities for State Bank and Cambridge Technology
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between State and Cambridge is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Cambridge Technology Enterpris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambridge Technology 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 Cambridge Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambridge Technology has no effect on the direction of State Bank i.e., State Bank and Cambridge Technology go up and down completely randomly.
Pair Corralation between State Bank and Cambridge Technology
Assuming the 90 days trading horizon State Bank is expected to generate 2.42 times less return on investment than Cambridge Technology. But when comparing it to its historical volatility, State Bank of is 2.2 times less risky than Cambridge Technology. It trades about 0.04 of its potential returns per unit of risk. Cambridge Technology Enterprises is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 6,410 in Cambridge Technology Enterprises on October 13, 2024 and sell it today you would earn a total of 3,696 from holding Cambridge Technology Enterprises or generate 57.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
State Bank of vs. Cambridge Technology Enterpris
Performance |
| Timeline |
| State Bank |
| Cambridge Technology |
State Bank and Cambridge Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and Cambridge Technology
The main advantage of trading using opposite State Bank and Cambridge Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, Cambridge Technology 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 Cambridge Technology will offset losses from the drop in Cambridge Technology's long position.| State Bank vs. Niraj Ispat Industries | State Bank vs. Computer Age Management | State Bank vs. Ratnamani Metals Tubes | State Bank vs. One 97 Communications |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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