Correlation Between State Bank and General Insurance
Can any of the company-specific risk be diversified away by investing in both State Bank and General Insurance 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 General Insurance 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 General Insurance, you can compare the effects of market volatilities on State Bank and General Insurance 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 General Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and General Insurance.
Diversification Opportunities for State Bank and General Insurance
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between State and General is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Insurance 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 General Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Insurance has no effect on the direction of State Bank i.e., State Bank and General Insurance go up and down completely randomly.
Pair Corralation between State Bank and General Insurance
Assuming the 90 days trading horizon State Bank is expected to generate 1.63 times less return on investment than General Insurance. But when comparing it to its historical volatility, State Bank of is 1.83 times less risky than General Insurance. It trades about 0.06 of its potential returns per unit of risk. General Insurance is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 29,726 in General Insurance on November 5, 2024 and sell it today you would earn a total of 11,419 from holding General Insurance or generate 38.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.3% |
| Values | Daily Returns |
State Bank of vs. General Insurance
Performance |
| Timeline |
| State Bank |
| General Insurance |
State Bank and General Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and General Insurance
The main advantage of trading using opposite State Bank and General Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, General Insurance 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 General Insurance will offset losses from the drop in General Insurance's long position.| State Bank vs. Aarti Drugs Limited | State Bank vs. SANOFI S HEALTHC | State Bank vs. Apollo Hospitals Enterprise | State Bank vs. Zota Health Care |
| General Insurance vs. State Bank of | General Insurance vs. Reliance Industries Limited | General Insurance vs. HDFC Bank Limited | General Insurance vs. Tata Motors 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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