Correlation Between Garware Technical and State Bank

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

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

Diversification Opportunities for Garware Technical and State Bank

-0.08

Correlation Coefficient

Garware Technical  State Bank

Good diversification

The 3 months correlation between Garware and State is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Garware Technical Fibres and State Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Bank and Garware Technical 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 Garware Technical Fibres 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 Garware Technical i.e., Garware Technical and State Bank go up and down completely randomly.

Pair Corralation between Garware Technical and State Bank

Assuming the 90 days trading horizon Garware Technical Fibres is expected to under-perform the State Bank. In addition to that, Garware Technical is 2.59 times more volatile than State Bank of. It trades about -0.22 of its total potential returns per unit of risk. State Bank of is currently generating about -0.47 per unit of volatility. If you would invest  85,805  in State Bank of on October 10, 2024 and sell it today you would lose (8,690) from holding State Bank of or give up 10.13% of portfolio value over 90 days.

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

Garware Technical Fibres  vs.  State Bank of

Garware Technical Fibres

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Garware Technical Fibres are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Garware Technical reported 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Garware Technical and State Bank

The main advantage of trading using opposite Garware Technical and State Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garware Technical 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 Garware Technical Fibres 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.