Correlation Between State Bank and Selan Exploration
Can any of the company-specific risk be diversified away by investing in both State Bank and Selan Exploration 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 Selan Exploration 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 Selan Exploration Technology, you can compare the effects of market volatilities on State Bank and Selan Exploration 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 Selan Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Selan Exploration.
Diversification Opportunities for State Bank and Selan Exploration
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between State and Selan is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Selan Exploration Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selan Exploration 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 Selan Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selan Exploration has no effect on the direction of State Bank i.e., State Bank and Selan Exploration go up and down completely randomly.
Pair Corralation between State Bank and Selan Exploration
Assuming the 90 days trading horizon State Bank of is expected to generate 0.26 times more return on investment than Selan Exploration. However, State Bank of is 3.81 times less risky than Selan Exploration. It trades about -0.4 of its potential returns per unit of risk. Selan Exploration Technology is currently generating about -0.22 per unit of risk. If you would invest 76,095 in State Bank of on December 4, 2024 and sell it today you would lose (6,565) from holding State Bank of or give up 8.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Bank of vs. Selan Exploration Technology
Performance |
| Timeline |
| State Bank |
| Selan Exploration |
State Bank and Selan Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and Selan Exploration
The main advantage of trading using opposite State Bank and Selan Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, Selan Exploration 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 Selan Exploration will offset losses from the drop in Selan Exploration's long position.| State Bank vs. Praxis Home Retail | State Bank vs. SANOFI S HEALTHC | State Bank vs. Credo Brands Marketing | State Bank vs. Spencers Retail Limited |
| Selan Exploration vs. Krebs Biochemicals and | Selan Exploration vs. Omkar Speciality Chemicals | Selan Exploration vs. Mangalore Chemicals Fertilizers | Selan Exploration vs. Alkali Metals 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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