Correlation Between Naga Dhunseri and State Bank

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

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

Diversification Opportunities for Naga Dhunseri and State Bank

0.35

Correlation Coefficient

Naga Dhunseri  State Bank

Weak diversification

The 3 months correlation between Naga and State is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Naga Dhunseri Group and State Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Bank and Naga Dhunseri 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 Naga Dhunseri Group 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 Naga Dhunseri i.e., Naga Dhunseri and State Bank go up and down completely randomly.

Pair Corralation between Naga Dhunseri and State Bank

Assuming the 90 days trading horizon Naga Dhunseri Group is expected to generate 1.86 times more return on investment than State Bank. However, Naga Dhunseri is 1.86 times more volatile than State Bank of. It trades about 0.1 of its potential returns per unit of risk. State Bank of is currently generating about 0.07 per unit of risk. If you would invest  137,222  in Naga Dhunseri Group on September 27, 2024 and sell it today you would earn a total of  336,823  from holding Naga Dhunseri Group or generate 245.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.36%
Values	Daily Returns

Naga Dhunseri Group  vs.  State Bank of

Naga Dhunseri Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Naga Dhunseri Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Naga Dhunseri unveiled solid returns over the last few months and may actually be approaching a breakup point.

State Bank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in State Bank of are ranked lower than 1 (%) 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Naga Dhunseri and State Bank

The main advantage of trading using opposite Naga Dhunseri and State Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naga Dhunseri 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 Naga Dhunseri Group 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.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.