Correlation Between State Bank and Cybertech Systems

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

Diversification Opportunities for State Bank and Cybertech Systems

0.06

Correlation Coefficient

State Bank  Cybertech Systems

Significant diversification

The 3 months correlation between State and Cybertech is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Cybertech Systems And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cybertech Systems And 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 Cybertech Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cybertech Systems And has no effect on the direction of State Bank i.e., State Bank and Cybertech Systems go up and down completely randomly.

Pair Corralation between State Bank and Cybertech Systems

Assuming the 90 days trading horizon State Bank of is expected to generate 0.6 times more return on investment than Cybertech Systems. However, State Bank of is 1.67 times less risky than Cybertech Systems. It trades about 0.02 of its potential returns per unit of risk. Cybertech Systems And is currently generating about -0.03 per unit of risk. If you would invest  80,185  in State Bank of on September 23, 2024 and sell it today you would earn a total of  1,015  from holding State Bank of or generate 1.27% return on investment over 90 days.

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

State Bank of  vs.  Cybertech Systems And

State Bank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in State Bank of are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, State Bank is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Cybertech Systems And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cybertech Systems And has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Cybertech Systems is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with State Bank and Cybertech Systems

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

The idea behind State Bank of and Cybertech Systems And 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.