Correlation Between State Bank and Titan Company

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

Diversification Opportunities for State Bank and Titan Company

-0.62

Correlation Coefficient

State Bank  Titan Company

Excellent diversification

The 3 months correlation between State and Titan is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Titan Company Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan 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 Titan Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Limited has no effect on the direction of State Bank i.e., State Bank and Titan Company go up and down completely randomly.

Pair Corralation between State Bank and Titan Company

Assuming the 90 days trading horizon State Bank of is expected to generate 1.24 times more return on investment than Titan Company. However, State Bank is 1.24 times more volatile than Titan Company Limited. It trades about 0.03 of its potential returns per unit of risk. Titan Company Limited is currently generating about -0.1 per unit of risk. If you would invest  81,650  in State Bank of on September 4, 2024 and sell it today you would earn a total of  1,990  from holding State Bank of or generate 2.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

State Bank of  vs.  Titan Company Limited

State Bank

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in State Bank of are ranked lower than 2 (%) 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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Titan Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Titan Company Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with State Bank and Titan Company

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

The idea behind State Bank of and Titan Company 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.