Correlation Between State Bank and Axis Bank
Can any of the company-specific risk be diversified away by investing in both State Bank and Axis Bank 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 Axis Bank 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 Axis Bank Limited, you can compare the effects of market volatilities on State Bank and Axis Bank 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 Axis Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Axis Bank.
Diversification Opportunities for State Bank and Axis Bank
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between State and Axis is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Axis Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axis Bank 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 Axis Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axis Bank Limited has no effect on the direction of State Bank i.e., State Bank and Axis Bank go up and down completely randomly.
Pair Corralation between State Bank and Axis Bank
Assuming the 90 days horizon State Bank of is expected to generate 1.07 times more return on investment than Axis Bank. However, State Bank is 1.07 times more volatile than Axis Bank Limited. It trades about 0.03 of its potential returns per unit of risk. Axis Bank Limited is currently generating about -0.02 per unit of risk. If you would invest 7,363 in State Bank of on November 3, 2024 and sell it today you would earn a total of 837.00 from holding State Bank of or generate 11.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Bank of vs. Axis Bank Limited
Performance |
| Timeline |
| State Bank |
| Axis Bank Limited |
State Bank and Axis Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and Axis Bank
The main advantage of trading using opposite State Bank and Axis Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, Axis Bank 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 Axis Bank will offset losses from the drop in Axis Bank's long position.| State Bank vs. AIR LIQUIDE ADR | State Bank vs. DELTA AIR LINES | State Bank vs. Western Copper and | State Bank vs. MCEWEN MINING INC |
| Axis Bank vs. USU Software AG | Axis Bank vs. APPLIED MATERIALS | Axis Bank vs. FORMPIPE SOFTWARE AB | Axis Bank vs. Sumitomo Rubber Industries |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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