Correlation Between State Bank and CAP LEASE

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

Diversification Opportunities for State Bank and CAP LEASE

-0.04

Correlation Coefficient

State Bank  CAP LEASE

Good diversification

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

Pair Corralation between State Bank and CAP LEASE

Assuming the 90 days trading horizon State Bank of is expected to under-perform the CAP LEASE. In addition to that, State Bank is 1.35 times more volatile than CAP LEASE AVIATION. It trades about -0.27 of its total potential returns per unit of risk. CAP LEASE AVIATION is currently generating about 0.0 per unit of volatility. If you would invest  50.00  in CAP LEASE AVIATION on October 25, 2024 and sell it today you would earn a total of  0.00  from holding CAP LEASE AVIATION or generate 0.0% return on investment over 90 days.

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

State Bank of  vs.  CAP LEASE AVIATION

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

CAP LEASE AVIATION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAP LEASE AVIATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CAP LEASE is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with State Bank and CAP LEASE

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

The idea behind State Bank of and CAP LEASE AVIATION 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 CEOs Directory module to screen CEOs from public companies around the world.