Correlation Between SBI Cards and Tribhovandas Bhimji

Can any of the company-specific risk be diversified away by investing in both SBI Cards and Tribhovandas Bhimji 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 SBI Cards and Tribhovandas Bhimji into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SBI Cards and and Tribhovandas Bhimji Zaveri, you can compare the effects of market volatilities on SBI Cards and Tribhovandas Bhimji 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 SBI Cards with a short position of Tribhovandas Bhimji. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Cards and Tribhovandas Bhimji.

Diversification Opportunities for SBI Cards and Tribhovandas Bhimji

0.63

Correlation Coefficient

SBI Cards  Tribhovandas Bhimji

Poor diversification

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

Pair Corralation between SBI Cards and Tribhovandas Bhimji

Assuming the 90 days trading horizon SBI Cards and is expected to under-perform the Tribhovandas Bhimji. But the stock apears to be less risky and, when comparing its historical volatility, SBI Cards and is 3.58 times less risky than Tribhovandas Bhimji. The stock trades about -0.03 of its potential returns per unit of risk. The Tribhovandas Bhimji Zaveri is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  12,246  in Tribhovandas Bhimji Zaveri on September 29, 2024 and sell it today you would earn a total of  11,599  from holding Tribhovandas Bhimji Zaveri or generate 94.72% return on investment over 90 days.

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

SBI Cards and  vs.  Tribhovandas Bhimji Zaveri

SBI Cards

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SBI Cards and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Tribhovandas Bhimji

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tribhovandas Bhimji Zaveri has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with SBI Cards and Tribhovandas Bhimji

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

The idea behind SBI Cards and and Tribhovandas Bhimji Zaveri 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.