Correlation Between State Bank and Sobha
Can any of the company-specific risk be diversified away by investing in both State Bank and Sobha 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 Sobha 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 Sobha Limited, you can compare the effects of market volatilities on State Bank and Sobha 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 Sobha. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Sobha.
Diversification Opportunities for State Bank and Sobha
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between State and Sobha is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Sobha Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sobha Limited 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 Sobha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sobha Limited has no effect on the direction of State Bank i.e., State Bank and Sobha go up and down completely randomly.
Pair Corralation between State Bank and Sobha
Assuming the 90 days trading horizon State Bank is expected to generate 1.45 times less return on investment than Sobha. But when comparing it to its historical volatility, State Bank of is 1.3 times less risky than Sobha. It trades about 0.13 of its potential returns per unit of risk. Sobha Limited is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 152,205 in Sobha Limited on September 19, 2024 and sell it today you would earn a total of 9,815 from holding Sobha Limited or generate 6.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Bank of vs. Sobha Limited
Performance |
| Timeline |
| State Bank |
| Sobha Limited |
State Bank and Sobha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and Sobha
The main advantage of trading using opposite State Bank and Sobha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, Sobha 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 Sobha will offset losses from the drop in Sobha's long position.| State Bank vs. Metalyst Forgings Limited | State Bank vs. Styrenix Performance Materials | State Bank vs. Shyam Metalics and | State Bank vs. Navneet Education Limited |
| Sobha vs. Indian Railway Finance | Sobha vs. Cholamandalam Financial Holdings | Sobha vs. Reliance Industries Limited | Sobha vs. Tata Consultancy Services |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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