Correlation Between State Bank and Ocado Group

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

Diversification Opportunities for State Bank and Ocado Group

0.3

Correlation Coefficient

State Bank  Ocado Group

Weak diversification

The 3 months correlation between State and Ocado is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Ocado Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocado Group PLC 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 Ocado Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocado Group PLC has no effect on the direction of State Bank i.e., State Bank and Ocado Group go up and down completely randomly.

Pair Corralation between State Bank and Ocado Group

Assuming the 90 days trading horizon State Bank of is expected to under-perform the Ocado Group. But the stock apears to be less risky and, when comparing its historical volatility, State Bank of is 2.3 times less risky than Ocado Group. The stock trades about -0.3 of its potential returns per unit of risk. The Ocado Group PLC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  31,270  in Ocado Group PLC on October 25, 2024 and sell it today you would earn a total of  1,590  from holding Ocado Group PLC or generate 5.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

State Bank of  vs.  Ocado Group PLC

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.

Ocado Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ocado Group PLC 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.

Pair Trading with State Bank and Ocado Group

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

The idea behind State Bank of and Ocado Group PLC 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.