Correlation Between State Bank and Fineotex Chemical
Can any of the company-specific risk be diversified away by investing in both State Bank and Fineotex Chemical 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 Fineotex Chemical 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 Fineotex Chemical Limited, you can compare the effects of market volatilities on State Bank and Fineotex Chemical 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 Fineotex Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Fineotex Chemical.
Diversification Opportunities for State Bank and Fineotex Chemical
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between State and Fineotex is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Fineotex Chemical Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fineotex Chemical 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 Fineotex Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fineotex Chemical has no effect on the direction of State Bank i.e., State Bank and Fineotex Chemical go up and down completely randomly.
Pair Corralation between State Bank and Fineotex Chemical
Assuming the 90 days trading horizon State Bank of is expected to generate 0.64 times more return on investment than Fineotex Chemical. However, State Bank of is 1.56 times less risky than Fineotex Chemical. It trades about 0.02 of its potential returns per unit of risk. Fineotex Chemical Limited is currently generating about 0.0 per unit of risk. If you would invest 82,480 in State Bank of on September 3, 2024 and sell it today you would earn a total of 1,415 from holding State Bank of or generate 1.72% 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. Fineotex Chemical Limited
Performance |
| Timeline |
| State Bank |
| Fineotex Chemical |
State Bank and Fineotex Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and Fineotex Chemical
The main advantage of trading using opposite State Bank and Fineotex Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, Fineotex Chemical 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 Fineotex Chemical will offset losses from the drop in Fineotex Chemical'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 |
| Fineotex Chemical vs. Blue Coast Hotels | Fineotex Chemical vs. Samhi Hotels Limited | Fineotex Chemical vs. Manaksia Coated Metals | Fineotex Chemical vs. Asian Hotels 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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