Correlation Between State Bank and JBM Auto
Can any of the company-specific risk be diversified away by investing in both State Bank and JBM Auto 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 JBM Auto 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 JBM Auto Limited, you can compare the effects of market volatilities on State Bank and JBM Auto 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 JBM Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and JBM Auto.
Diversification Opportunities for State Bank and JBM Auto
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between State and JBM is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and JBM Auto Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBM Auto 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 JBM Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBM Auto Limited has no effect on the direction of State Bank i.e., State Bank and JBM Auto go up and down completely randomly.
Pair Corralation between State Bank and JBM Auto
Assuming the 90 days trading horizon State Bank of is expected to generate 0.57 times more return on investment than JBM Auto. However, State Bank of is 1.75 times less risky than JBM Auto. It trades about -0.02 of its potential returns per unit of risk. JBM Auto Limited is currently generating about -0.03 per unit of risk. If you would invest 81,165 in State Bank of on November 3, 2024 and sell it today you would lose (3,875) from holding State Bank of or give up 4.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
State Bank of vs. JBM Auto Limited
Performance |
| Timeline |
| State Bank |
| JBM Auto Limited |
State Bank and JBM Auto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and JBM Auto
The main advantage of trading using opposite State Bank and JBM Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, JBM Auto 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 JBM Auto will offset losses from the drop in JBM Auto's long position.| State Bank vs. Styrenix Performance Materials | State Bank vs. JB Chemicals Pharmaceuticals | State Bank vs. Rashtriya Chemicals and | State Bank vs. PB Fintech Limited |
| JBM Auto vs. Kingfa Science Technology | JBM Auto vs. Infomedia Press Limited | JBM Auto vs. Le Travenues Technology | JBM Auto vs. Sintex Plastics Technology |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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