Correlation Between Cartrade Tech and State Bank

Can any of the company-specific risk be diversified away by investing in both Cartrade Tech and State Bank 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 Cartrade Tech and State Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cartrade Tech Limited and State Bank of, you can compare the effects of market volatilities on Cartrade Tech and State Bank 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 Cartrade Tech with a short position of State Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cartrade Tech and State Bank.

Diversification Opportunities for Cartrade Tech and State Bank

-0.04

Correlation Coefficient

Cartrade Tech  State Bank

Good diversification

The 3 months correlation between Cartrade and State is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Cartrade Tech Limited and State Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Bank and Cartrade Tech 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 Cartrade Tech Limited are associated (or correlated) with State Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Bank has no effect on the direction of Cartrade Tech i.e., Cartrade Tech and State Bank go up and down completely randomly.

Pair Corralation between Cartrade Tech and State Bank

Assuming the 90 days trading horizon Cartrade Tech Limited is expected to generate 2.0 times more return on investment than State Bank. However, Cartrade Tech is 2.0 times more volatile than State Bank of. It trades about 0.2 of its potential returns per unit of risk. State Bank of is currently generating about -0.05 per unit of risk. If you would invest  100,145  in Cartrade Tech Limited on October 21, 2024 and sell it today you would earn a total of  47,080  from holding Cartrade Tech Limited or generate 47.01% return on investment over 90 days.

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

Cartrade Tech Limited  vs.  State Bank of

Cartrade Tech Limited

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cartrade Tech Limited are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Cartrade Tech exhibited solid returns over the last few months and may actually be approaching a breakup point.

State Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days State Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, State Bank is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cartrade Tech and State Bank

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

The idea behind Cartrade Tech Limited and State Bank of 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.