Correlation Between State Bank and GALP ENERGIA
Can any of the company-specific risk be diversified away by investing in both State Bank and GALP ENERGIA 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 GALP ENERGIA 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 GALP ENERGIA B , you can compare the effects of market volatilities on State Bank and GALP ENERGIA 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 GALP ENERGIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and GALP ENERGIA.
Diversification Opportunities for State Bank and GALP ENERGIA
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between State and GALP is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and GALP ENERGIA B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GALP ENERGIA B 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 GALP ENERGIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GALP ENERGIA B has no effect on the direction of State Bank i.e., State Bank and GALP ENERGIA go up and down completely randomly.
Pair Corralation between State Bank and GALP ENERGIA
Assuming the 90 days horizon State Bank is expected to generate 1.75 times less return on investment than GALP ENERGIA. In addition to that, State Bank is 1.35 times more volatile than GALP ENERGIA B . It trades about 0.14 of its total potential returns per unit of risk. GALP ENERGIA B is currently generating about 0.33 per unit of volatility. If you would invest 1,556 in GALP ENERGIA B on September 17, 2024 and sell it today you would earn a total of 127.00 from holding GALP ENERGIA B or generate 8.16% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
State Bank of vs. GALP ENERGIA B
Performance |
Timeline |
State Bank |
GALP ENERGIA B |
State Bank and GALP ENERGIA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with State Bank and GALP ENERGIA
The main advantage of trading using opposite State Bank and GALP ENERGIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, GALP ENERGIA 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 GALP ENERGIA will offset losses from the drop in GALP ENERGIA's long position.State Bank vs. China Merchants Bank | State Bank vs. HDFC Bank Limited | State Bank vs. ICICI Bank Limited | State Bank vs. PT Bank Central |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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