Correlation Between State Bank and STOMO MITSUI

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Can any of the company-specific risk be diversified away by investing in both State Bank and STOMO MITSUI 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 STOMO MITSUI 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 STOMO MITSUI FINL, you can compare the effects of market volatilities on State Bank and STOMO MITSUI 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 STOMO MITSUI. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and STOMO MITSUI.

Diversification Opportunities for State Bank and STOMO MITSUI

StateSTOMODiversified AwayStateSTOMODiversified Away100%
0.88
  Correlation Coefficient

Very poor diversification

The 3 months correlation between State and STOMO is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and STOMO MITSUI FINL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STOMO MITSUI FINL 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 STOMO MITSUI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STOMO MITSUI FINL has no effect on the direction of State Bank i.e., State Bank and STOMO MITSUI go up and down completely randomly.

Pair Corralation between State Bank and STOMO MITSUI

Assuming the 90 days horizon State Bank of is expected to generate 0.9 times more return on investment than STOMO MITSUI. However, State Bank of is 1.11 times less risky than STOMO MITSUI. It trades about 0.15 of its potential returns per unit of risk. STOMO MITSUI FINL is currently generating about 0.02 per unit of risk. If you would invest  8,900  in State Bank of on September 23, 2024 and sell it today you would earn a total of  450.00  from holding State Bank of or generate 5.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

State Bank of  vs.  STOMO MITSUI FINL

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 051015202530
JavaScript chart by amCharts 3.21.15SID XMF
       Timeline  
State Bank 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in State Bank of are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, State Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec84868890929496
STOMO MITSUI FINL 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in STOMO MITSUI FINL are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, STOMO MITSUI unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec192021222324

State Bank and STOMO MITSUI Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.86-4.39-2.92-1.450.01.523.064.66.14 0.020.040.060.080.10
JavaScript chart by amCharts 3.21.15SID XMF
       Returns  

Pair Trading with State Bank and STOMO MITSUI

The main advantage of trading using opposite State Bank and STOMO MITSUI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, STOMO MITSUI 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 STOMO MITSUI will offset losses from the drop in STOMO MITSUI's long position.
The idea behind State Bank of and STOMO MITSUI FINL 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.
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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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