Correlation Between State Bank and SUMITOMO P
Can any of the company-specific risk be diversified away by investing in both State Bank and SUMITOMO P 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 SUMITOMO P 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 SUMITOMO P SP, you can compare the effects of market volatilities on State Bank and SUMITOMO P 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 SUMITOMO P. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and SUMITOMO P.
Diversification Opportunities for State Bank and SUMITOMO P
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between State and SUMITOMO is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and SUMITOMO P SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUMITOMO P SP 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 SUMITOMO P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUMITOMO P SP has no effect on the direction of State Bank i.e., State Bank and SUMITOMO P go up and down completely randomly.
Pair Corralation between State Bank and SUMITOMO P
Assuming the 90 days horizon State Bank of is expected to generate 1.43 times more return on investment than SUMITOMO P. However, State Bank is 1.43 times more volatile than SUMITOMO P SP. It trades about 0.1 of its potential returns per unit of risk. SUMITOMO P SP is currently generating about 0.09 per unit of risk. If you would invest 8,500 in State Bank of on August 28, 2024 and sell it today you would earn a total of 400.00 from holding State Bank of or generate 4.71% 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. SUMITOMO P SP
Performance |
| Timeline |
| State Bank |
| SUMITOMO P SP |
State Bank and SUMITOMO P Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and SUMITOMO P
The main advantage of trading using opposite State Bank and SUMITOMO P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, SUMITOMO P 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 SUMITOMO P will offset losses from the drop in SUMITOMO P's long position.The idea behind State Bank of and SUMITOMO P SP pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| SUMITOMO P vs. Superior Plus Corp | SUMITOMO P vs. NMI Holdings | SUMITOMO P vs. Origin Agritech | SUMITOMO P vs. SIVERS SEMICONDUCTORS AB |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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