Correlation Between State Bank and DCB Bank
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By analyzing existing cross correlation between State Bank of and DCB Bank Limited, you can compare the effects of market volatilities on State Bank and DCB Bank 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 DCB Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and DCB Bank.
Diversification Opportunities for State Bank and DCB Bank
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between State and DCB is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and DCB Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DCB Bank Limited 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 DCB Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DCB Bank Limited has no effect on the direction of State Bank i.e., State Bank and DCB Bank go up and down completely randomly.
Pair Corralation between State Bank and DCB Bank
Assuming the 90 days trading horizon State Bank of is expected to under-perform the DCB Bank. But the stock apears to be less risky and, when comparing its historical volatility, State Bank of is 1.05 times less risky than DCB Bank. The stock trades about -0.25 of its potential returns per unit of risk. The DCB Bank Limited is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest 12,250 in DCB Bank Limited on October 25, 2024 and sell it today you would lose (720.00) from holding DCB Bank Limited or give up 5.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Bank of vs. DCB Bank Limited
Performance |
| Timeline |
| State Bank |
| DCB Bank Limited |
State Bank and DCB Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and DCB Bank
The main advantage of trading using opposite State Bank and DCB Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, DCB Bank 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 DCB Bank will offset losses from the drop in DCB Bank's long position.| State Bank vs. Life Insurance | State Bank vs. HDFC Bank Limited | State Bank vs. ICICI Bank Limited | State Bank vs. Reliance Industries Limited |
| DCB Bank vs. State Bank of | DCB Bank vs. Life Insurance | DCB Bank vs. HDFC Bank Limited | DCB Bank 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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