Correlation Between State Bank and Infosys
Can any of the company-specific risk be diversified away by investing in both State Bank and Infosys 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 Infosys 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 Infosys Limited, you can compare the effects of market volatilities on State Bank and Infosys 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 Infosys. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Infosys.
Diversification Opportunities for State Bank and Infosys
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between State and Infosys is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Infosys Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys 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 Infosys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infosys Limited has no effect on the direction of State Bank i.e., State Bank and Infosys go up and down completely randomly.
Pair Corralation between State Bank and Infosys
Assuming the 90 days trading horizon State Bank is expected to generate 3.4 times less return on investment than Infosys. In addition to that, State Bank is 1.12 times more volatile than Infosys Limited. It trades about 0.01 of its total potential returns per unit of risk. Infosys Limited is currently generating about 0.03 per unit of volatility. If you would invest 185,503 in Infosys Limited on August 25, 2024 and sell it today you would earn a total of 4,722 from holding Infosys Limited or generate 2.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
State Bank of vs. Infosys Limited
Performance |
| Timeline |
| State Bank |
| Infosys Limited |
State Bank and Infosys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and Infosys
The main advantage of trading using opposite State Bank and Infosys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, Infosys 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 Infosys will offset losses from the drop in Infosys' long position.| State Bank vs. Max Financial Services | State Bank vs. Geojit Financial Services | State Bank vs. Datamatics Global Services | State Bank vs. Chalet Hotels Limited |
| Infosys vs. Manaksia Coated Metals | Infosys vs. BF Utilities Limited | Infosys vs. Nahar Industrial Enterprises | Infosys vs. Home First Finance |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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