Correlation Between State Bank and Alien Metals

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

Diversification Opportunities for State Bank and Alien Metals

-0.16

Correlation Coefficient

State Bank  Alien Metals

Good diversification

The 3 months correlation between State and Alien is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Alien Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alien Metals 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 Alien Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alien Metals has no effect on the direction of State Bank i.e., State Bank and Alien Metals go up and down completely randomly.

Pair Corralation between State Bank and Alien Metals

Assuming the 90 days trading horizon State Bank of is expected to generate 0.31 times more return on investment than Alien Metals. However, State Bank of is 3.22 times less risky than Alien Metals. It trades about 0.0 of its potential returns per unit of risk. Alien Metals is currently generating about -0.06 per unit of risk. If you would invest  9,330  in State Bank of on October 7, 2024 and sell it today you would lose (60.00) from holding State Bank of or give up 0.64% of portfolio value over 90 days.

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

State Bank of  vs.  Alien Metals

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.

Alien Metals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with State Bank and Alien Metals

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

The idea behind State Bank of and Alien Metals 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.