Correlation Between State Bank and VA Tech
Can any of the company-specific risk be diversified away by investing in both State Bank and VA Tech 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 VA Tech 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 VA Tech Wabag, you can compare the effects of market volatilities on State Bank and VA Tech 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 VA Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and VA Tech.
Diversification Opportunities for State Bank and VA Tech
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between State and WABAG is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and VA Tech Wabag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VA Tech Wabag 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 VA Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VA Tech Wabag has no effect on the direction of State Bank i.e., State Bank and VA Tech go up and down completely randomly.
Pair Corralation between State Bank and VA Tech
Assuming the 90 days trading horizon State Bank of is expected to generate 0.92 times more return on investment than VA Tech. However, State Bank of is 1.08 times less risky than VA Tech. It trades about 0.14 of its potential returns per unit of risk. VA Tech Wabag is currently generating about 0.05 per unit of risk. If you would invest 79,205 in State Bank of on August 29, 2024 and sell it today you would earn a total of 4,735 from holding State Bank of or generate 5.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Bank of vs. VA Tech Wabag
Performance |
| Timeline |
| State Bank |
| VA Tech Wabag |
State Bank and VA Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and VA Tech
The main advantage of trading using opposite State Bank and VA Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, VA Tech 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 VA Tech will offset losses from the drop in VA Tech's long position.| State Bank vs. MRF Limited | State Bank vs. Nalwa Sons Investments | State Bank vs. Kalyani Investment | State Bank vs. Vardhman Holdings Limited |
| VA Tech vs. Reliance Industries Limited | VA Tech vs. State Bank of | VA Tech vs. HDFC Bank Limited | VA Tech vs. Oil Natural Gas |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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