Correlation Between State Bank and Jash Engineering
Can any of the company-specific risk be diversified away by investing in both State Bank and Jash Engineering 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 Jash Engineering 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 Jash Engineering Limited, you can compare the effects of market volatilities on State Bank and Jash Engineering 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 Jash Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Jash Engineering.
Diversification Opportunities for State Bank and Jash Engineering
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between State and Jash is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Jash Engineering Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jash Engineering 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 Jash Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jash Engineering has no effect on the direction of State Bank i.e., State Bank and Jash Engineering go up and down completely randomly.
Pair Corralation between State Bank and Jash Engineering
Assuming the 90 days trading horizon State Bank is expected to generate 2.43 times less return on investment than Jash Engineering. But when comparing it to its historical volatility, State Bank of is 1.79 times less risky than Jash Engineering. It trades about 0.09 of its potential returns per unit of risk. Jash Engineering Limited is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 51,869 in Jash Engineering Limited on September 17, 2024 and sell it today you would earn a total of 7,926 from holding Jash Engineering Limited or generate 15.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Bank of vs. Jash Engineering Limited
Performance |
| Timeline |
| State Bank |
| Jash Engineering |
State Bank and Jash Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and Jash Engineering
The main advantage of trading using opposite State Bank and Jash Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, Jash Engineering 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 Jash Engineering will offset losses from the drop in Jash Engineering's long position.| State Bank vs. Juniper Hotels | State Bank vs. Taj GVK Hotels | State Bank vs. Asian Hotels Limited | State Bank vs. Tata Chemicals Limited |
| Jash Engineering vs. Prakash Steelage Limited | Jash Engineering vs. Tree House Education | Jash Engineering vs. Sunflag Iron And | Jash Engineering vs. Electrosteel Castings 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 Stocks Directory module to find actively traded stocks across global markets.
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