Correlation Between State Bank and CREMECOMTRSBI

Can any of the company-specific risk be diversified away by investing in both State Bank and CREMECOMTRSBI 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 CREMECOMTRSBI 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 CREMECOMTRSBI DL 001, you can compare the effects of market volatilities on State Bank and CREMECOMTRSBI 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 CREMECOMTRSBI. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and CREMECOMTRSBI.

Diversification Opportunities for State Bank and CREMECOMTRSBI

-0.63

Correlation Coefficient

State Bank  CREMECOMTRSBI

Excellent diversification

The 3 months correlation between State and CREMECOMTRSBI is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and CREMECOMTRSBI DL 001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CREMECOMTRSBI DL 001 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 CREMECOMTRSBI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CREMECOMTRSBI DL 001 has no effect on the direction of State Bank i.e., State Bank and CREMECOMTRSBI go up and down completely randomly.

Pair Corralation between State Bank and CREMECOMTRSBI

Assuming the 90 days horizon State Bank is expected to generate 27.76 times less return on investment than CREMECOMTRSBI. But when comparing it to its historical volatility, State Bank of is 30.66 times less risky than CREMECOMTRSBI. It trades about 0.07 of its potential returns per unit of risk. CREMECOMTRSBI DL 001 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  163.00  in CREMECOMTRSBI DL 001 on September 4, 2024 and sell it today you would lose (157.60) from holding CREMECOMTRSBI DL 001 or give up 96.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

State Bank of  vs.  CREMECOMTRSBI DL 001

State Bank

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in State Bank of are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, State Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CREMECOMTRSBI DL 001

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CREMECOMTRSBI DL 001 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CREMECOMTRSBI reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with State Bank and CREMECOMTRSBI

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

The idea behind State Bank of and CREMECOMTRSBI DL 001 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.