Correlation Between State Bank and Aban Offshore
Can any of the company-specific risk be diversified away by investing in both State Bank and Aban Offshore 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 Aban Offshore 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 Aban Offshore Limited, you can compare the effects of market volatilities on State Bank and Aban Offshore 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 Aban Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Aban Offshore.
Diversification Opportunities for State Bank and Aban Offshore
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between State and Aban is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Aban Offshore Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aban Offshore Limited 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 Aban Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aban Offshore Limited has no effect on the direction of State Bank i.e., State Bank and Aban Offshore go up and down completely randomly.
Pair Corralation between State Bank and Aban Offshore
Assuming the 90 days trading horizon State Bank of is expected to generate 0.64 times more return on investment than Aban Offshore. However, State Bank of is 1.57 times less risky than Aban Offshore. It trades about 0.09 of its potential returns per unit of risk. Aban Offshore Limited is currently generating about -0.07 per unit of risk. If you would invest 78,555 in State Bank of on September 14, 2024 and sell it today you would earn a total of 6,815 from holding State Bank of or generate 8.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
State Bank of vs. Aban Offshore Limited
Performance |
Timeline |
State Bank |
Aban Offshore Limited |
State Bank and Aban Offshore Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with State Bank and Aban Offshore
The main advantage of trading using opposite State Bank and Aban Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, Aban Offshore 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 Aban Offshore will offset losses from the drop in Aban Offshore's long position.State Bank vs. Reliance Industries Limited | State Bank vs. Oil Natural Gas | State Bank vs. ICICI Bank Limited |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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