Correlation Between State Bank and Apex Frozen

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

Diversification Opportunities for State Bank and Apex Frozen

0.24

Correlation Coefficient

State Bank  Apex Frozen

Modest diversification

The 3 months correlation between State and Apex is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Apex Frozen Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apex Frozen Foods 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 Apex Frozen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apex Frozen Foods has no effect on the direction of State Bank i.e., State Bank and Apex Frozen go up and down completely randomly.

Pair Corralation between State Bank and Apex Frozen

Assuming the 90 days trading horizon State Bank of is expected to generate 0.58 times more return on investment than Apex Frozen. However, State Bank of is 1.73 times less risky than Apex Frozen. It trades about 0.1 of its potential returns per unit of risk. Apex Frozen Foods is currently generating about 0.05 per unit of risk. If you would invest  79,085  in State Bank of on September 13, 2024 and sell it today you would earn a total of  7,075  from holding State Bank of or generate 8.95% return on investment over 90 days.

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

State Bank of  vs.  Apex Frozen Foods

State Bank

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in State Bank of are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, State Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Apex Frozen Foods

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Apex Frozen Foods are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Apex Frozen may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with State Bank and Apex Frozen

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

The idea behind State Bank of and Apex Frozen Foods 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.