Correlation Between State Bank and Kothari Petrochemicals
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By analyzing existing cross correlation between State Bank of and Kothari Petrochemicals Limited, you can compare the effects of market volatilities on State Bank and Kothari Petrochemicals 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 Kothari Petrochemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Kothari Petrochemicals.
Diversification Opportunities for State Bank and Kothari Petrochemicals
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between State and Kothari is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Kothari Petrochemicals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kothari Petrochemicals 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 Kothari Petrochemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kothari Petrochemicals has no effect on the direction of State Bank i.e., State Bank and Kothari Petrochemicals go up and down completely randomly.
Pair Corralation between State Bank and Kothari Petrochemicals
Assuming the 90 days trading horizon State Bank is expected to generate 1.96 times less return on investment than Kothari Petrochemicals. But when comparing it to its historical volatility, State Bank of is 1.28 times less risky than Kothari Petrochemicals. It trades about 0.18 of its potential returns per unit of risk. Kothari Petrochemicals Limited is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 18,522 in Kothari Petrochemicals Limited on September 17, 2024 and sell it today you would earn a total of 2,292 from holding Kothari Petrochemicals Limited or generate 12.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
State Bank of vs. Kothari Petrochemicals Limited
Performance |
Timeline |
State Bank |
Kothari Petrochemicals |
State Bank and Kothari Petrochemicals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with State Bank and Kothari Petrochemicals
The main advantage of trading using opposite State Bank and Kothari Petrochemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, Kothari Petrochemicals 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 Kothari Petrochemicals will offset losses from the drop in Kothari Petrochemicals' long position.State Bank vs. Juniper Hotels | State Bank vs. Taj GVK Hotels | State Bank vs. Asian Hotels Limited | State Bank vs. Tata Chemicals Limited |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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