Correlation Between State Bank and Max Financial
Can any of the company-specific risk be diversified away by investing in both State Bank and Max Financial 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 Max Financial 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 Max Financial Services, you can compare the effects of market volatilities on State Bank and Max Financial 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 Max Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Max Financial.
Diversification Opportunities for State Bank and Max Financial
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between State and Max is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Max Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Max Financial Services 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 Max Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Max Financial Services has no effect on the direction of State Bank i.e., State Bank and Max Financial go up and down completely randomly.
Pair Corralation between State Bank and Max Financial
Assuming the 90 days trading horizon State Bank of is expected to generate 1.32 times more return on investment than Max Financial. However, State Bank is 1.32 times more volatile than Max Financial Services. It trades about 0.07 of its potential returns per unit of risk. Max Financial Services is currently generating about -0.29 per unit of risk. If you would invest 79,455 in State Bank of on August 25, 2024 and sell it today you would earn a total of 2,150 from holding State Bank of or generate 2.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Bank of vs. Max Financial Services
Performance |
| Timeline |
| State Bank |
| Max Financial Services |
State Bank and Max Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and Max Financial
The main advantage of trading using opposite State Bank and Max Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, Max Financial 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 Max Financial will offset losses from the drop in Max Financial's long position.| State Bank vs. MRF Limited | State Bank vs. Honeywell Automation India | State Bank vs. Divis Laboratories Limited | State Bank vs. Indo Borax Chemicals |
| Max Financial vs. MRF Limited | Max Financial vs. Honeywell Automation India | Max Financial vs. Divis Laboratories Limited | Max Financial vs. Indo Borax Chemicals |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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