Correlation Between State Bank and Lemon Tree
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By analyzing existing cross correlation between State Bank of and Lemon Tree Hotels, you can compare the effects of market volatilities on State Bank and Lemon Tree 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 Lemon Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Lemon Tree.
Diversification Opportunities for State Bank and Lemon Tree
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between State and Lemon is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Lemon Tree Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lemon Tree Hotels 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 Lemon Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lemon Tree Hotels has no effect on the direction of State Bank i.e., State Bank and Lemon Tree go up and down completely randomly.
Pair Corralation between State Bank and Lemon Tree
Assuming the 90 days trading horizon State Bank of is expected to generate 0.57 times more return on investment than Lemon Tree. However, State Bank of is 1.76 times less risky than Lemon Tree. It trades about -0.25 of its potential returns per unit of risk. Lemon Tree Hotels is currently generating about -0.16 per unit of risk. If you would invest 81,205 in State Bank of on October 25, 2024 and sell it today you would lose (5,860) from holding State Bank of or give up 7.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Bank of vs. Lemon Tree Hotels
Performance |
| Timeline |
| State Bank |
| Lemon Tree Hotels |
State Bank and Lemon Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and Lemon Tree
The main advantage of trading using opposite State Bank and Lemon Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, Lemon Tree 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 Lemon Tree will offset losses from the drop in Lemon Tree's long position.| State Bank vs. Life Insurance | State Bank vs. HDFC Bank Limited | State Bank vs. ICICI Bank Limited | State Bank vs. Reliance Industries Limited |
| Lemon Tree vs. Reliance Industries Limited | Lemon Tree vs. HDFC Bank Limited | Lemon Tree vs. Bharti Airtel Limited | Lemon Tree vs. State Bank of |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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