Correlation Between State Bank and Diligent Media

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

Diversification Opportunities for State Bank and Diligent Media

-0.11

Correlation Coefficient

State Bank  Diligent Media

Good diversification

The 3 months correlation between State and Diligent is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Diligent Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diligent Media 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 Diligent Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diligent Media has no effect on the direction of State Bank i.e., State Bank and Diligent Media go up and down completely randomly.

Pair Corralation between State Bank and Diligent Media

Assuming the 90 days trading horizon State Bank is expected to generate 1.07 times less return on investment than Diligent Media. But when comparing it to its historical volatility, State Bank of is 1.67 times less risky than Diligent Media. It trades about 0.08 of its potential returns per unit of risk. Diligent Media is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  395.00  in Diligent Media on September 3, 2024 and sell it today you would earn a total of  126.00  from holding Diligent Media or generate 31.9% 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.  Diligent Media

State Bank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in State Bank of are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, State Bank is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Diligent Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diligent Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with State Bank and Diligent Media

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

The idea behind State Bank of and Diligent Media 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.