Correlation Between CSB Bank and V Mart

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Can any of the company-specific risk be diversified away by investing in both CSB Bank and V Mart 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 CSB Bank and V Mart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSB Bank Limited and V Mart Retail Limited, you can compare the effects of market volatilities on CSB Bank and V Mart 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 CSB Bank with a short position of V Mart. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSB Bank and V Mart.

Diversification Opportunities for CSB Bank and V Mart

-0.05
  Correlation Coefficient

Good diversification

The 3 months correlation between CSB and VMART is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding CSB Bank Limited and V Mart Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on V Mart Retail and CSB 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 CSB Bank Limited are associated (or correlated) with V Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of V Mart Retail has no effect on the direction of CSB Bank i.e., CSB Bank and V Mart go up and down completely randomly.

Pair Corralation between CSB Bank and V Mart

Assuming the 90 days trading horizon CSB Bank Limited is expected to generate 0.54 times more return on investment than V Mart. However, CSB Bank Limited is 1.84 times less risky than V Mart. It trades about -0.03 of its potential returns per unit of risk. V Mart Retail Limited is currently generating about -0.02 per unit of risk. If you would invest  32,260  in CSB Bank Limited on September 22, 2024 and sell it today you would lose (1,030) from holding CSB Bank Limited or give up 3.19% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

CSB Bank Limited  vs.  V Mart Retail Limited

 Performance 
       Timeline  
CSB Bank Limited 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CSB Bank Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, CSB Bank is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
V Mart Retail 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days V Mart Retail Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, V Mart is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

CSB Bank and V Mart Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CSB Bank and V Mart

The main advantage of trading using opposite CSB Bank and V Mart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSB Bank position performs unexpectedly, V Mart 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 V Mart will offset losses from the drop in V Mart's long position.
The idea behind CSB Bank Limited and V Mart Retail Limited 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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