Correlation Between State Bank and Sarthak Metals
Can any of the company-specific risk be diversified away by investing in both State Bank and Sarthak Metals 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 Sarthak Metals 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 Sarthak Metals Limited, you can compare the effects of market volatilities on State Bank and Sarthak Metals 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 Sarthak Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Sarthak Metals.
Diversification Opportunities for State Bank and Sarthak Metals
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between State and Sarthak is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Sarthak Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sarthak Metals 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 Sarthak Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sarthak Metals has no effect on the direction of State Bank i.e., State Bank and Sarthak Metals go up and down completely randomly.
Pair Corralation between State Bank and Sarthak Metals
Assuming the 90 days trading horizon State Bank of is expected to generate 0.37 times more return on investment than Sarthak Metals. However, State Bank of is 2.69 times less risky than Sarthak Metals. It trades about -0.21 of its potential returns per unit of risk. Sarthak Metals Limited is currently generating about -0.19 per unit of risk. If you would invest 74,920 in State Bank of on November 28, 2024 and sell it today you would lose (3,830) from holding State Bank of or give up 5.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Bank of vs. Sarthak Metals Limited
Performance |
| Timeline |
| State Bank |
| Sarthak Metals |
State Bank and Sarthak Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and Sarthak Metals
The main advantage of trading using opposite State Bank and Sarthak Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, Sarthak Metals 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 Sarthak Metals will offset losses from the drop in Sarthak Metals' long position.| State Bank vs. Network18 Media Investments | State Bank vs. Entertainment Network Limited | State Bank vs. Sambhaav Media Limited | State Bank vs. Zee Entertainment Enterprises |
| Sarthak Metals vs. Reliance Home Finance | Sarthak Metals vs. Spencers Retail Limited | Sarthak Metals vs. Future Retail Limited | Sarthak Metals vs. V2 Retail 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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