Correlation Between State Bank and RHI MAGNESITA
Can any of the company-specific risk be diversified away by investing in both State Bank and RHI MAGNESITA 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 RHI MAGNESITA 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 RHI MAGNESITA INDIA, you can compare the effects of market volatilities on State Bank and RHI MAGNESITA 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 RHI MAGNESITA. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and RHI MAGNESITA.
Diversification Opportunities for State Bank and RHI MAGNESITA
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between State and RHI is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and RHI MAGNESITA INDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RHI MAGNESITA INDIA 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 RHI MAGNESITA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RHI MAGNESITA INDIA has no effect on the direction of State Bank i.e., State Bank and RHI MAGNESITA go up and down completely randomly.
Pair Corralation between State Bank and RHI MAGNESITA
Assuming the 90 days trading horizon State Bank is expected to generate 2.0 times less return on investment than RHI MAGNESITA. But when comparing it to its historical volatility, State Bank of is 1.28 times less risky than RHI MAGNESITA. It trades about 0.09 of its potential returns per unit of risk. RHI MAGNESITA INDIA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 51,865 in RHI MAGNESITA INDIA on September 19, 2024 and sell it today you would earn a total of 3,130 from holding RHI MAGNESITA INDIA or generate 6.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Bank of vs. RHI MAGNESITA INDIA
Performance |
| Timeline |
| State Bank |
| RHI MAGNESITA INDIA |
State Bank and RHI MAGNESITA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and RHI MAGNESITA
The main advantage of trading using opposite State Bank and RHI MAGNESITA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, RHI MAGNESITA 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 RHI MAGNESITA will offset losses from the drop in RHI MAGNESITA's long position.| State Bank vs. Ratnamani Metals Tubes | State Bank vs. Hisar Metal Industries | State Bank vs. Allied Blenders Distillers | State Bank vs. Hybrid Financial Services |
| RHI MAGNESITA vs. State Bank of | RHI MAGNESITA vs. Life Insurance | RHI MAGNESITA vs. HDFC Bank Limited | RHI MAGNESITA vs. ICICI Bank 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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