Correlation Between State Bank and NBCC

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

Diversification Opportunities for State Bank and NBCC

-0.34

Correlation Coefficient

State Bank  NBCC

Very good diversification

The 3 months correlation between State and NBCC is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and NBCC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBCC 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 NBCC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBCC Limited has no effect on the direction of State Bank i.e., State Bank and NBCC go up and down completely randomly.

Pair Corralation between State Bank and NBCC

Assuming the 90 days trading horizon State Bank of is expected to under-perform the NBCC. But the stock apears to be less risky and, when comparing its historical volatility, State Bank of is 1.6 times less risky than NBCC. The stock trades about -0.01 of its potential returns per unit of risk. The NBCC Limited is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  8,913  in NBCC Limited on September 23, 2024 and sell it today you would earn a total of  530.00  from holding NBCC Limited or generate 5.95% 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.  NBCC Limited

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

NBCC Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NBCC Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with State Bank and NBCC

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

The idea behind State Bank of and NBCC 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.