Correlation Between State Bank and Agro Tech
Can any of the company-specific risk be diversified away by investing in both State Bank and Agro Tech 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 Agro Tech 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 Agro Tech Foods, you can compare the effects of market volatilities on State Bank and Agro Tech 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 Agro Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Agro Tech.
Diversification Opportunities for State Bank and Agro Tech
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between State and Agro is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Agro Tech Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agro Tech 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 Agro Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agro Tech Foods has no effect on the direction of State Bank i.e., State Bank and Agro Tech go up and down completely randomly.
Pair Corralation between State Bank and Agro Tech
Assuming the 90 days trading horizon State Bank of is expected to generate 0.72 times more return on investment than Agro Tech. However, State Bank of is 1.38 times less risky than Agro Tech. It trades about -0.02 of its potential returns per unit of risk. Agro Tech Foods is currently generating about -0.15 per unit of risk. If you would invest 78,830 in State Bank of on December 29, 2024 and sell it today you would lose (1,680) from holding State Bank of or give up 2.13% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
State Bank of vs. Agro Tech Foods
Performance |
Timeline |
State Bank |
Agro Tech Foods |
State Bank and Agro Tech Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with State Bank and Agro Tech
The main advantage of trading using opposite State Bank and Agro Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, Agro Tech 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 Agro Tech will offset losses from the drop in Agro Tech's long position.State Bank vs. Indraprastha Medical | State Bank vs. Life Insurance | State Bank vs. Global Health Limited | State Bank vs. HDFC Life Insurance |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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