Correlation Between State Bank and Sri Havisha

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

Diversification Opportunities for State Bank and Sri Havisha

0.45

Correlation Coefficient

State Bank  Sri Havisha

Very weak diversification

The 3 months correlation between State and Sri is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Sri Havisha Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sri Havisha Hospitality 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 Sri Havisha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sri Havisha Hospitality has no effect on the direction of State Bank i.e., State Bank and Sri Havisha go up and down completely randomly.

Pair Corralation between State Bank and Sri Havisha

Assuming the 90 days trading horizon State Bank is expected to generate 2.69 times less return on investment than Sri Havisha. But when comparing it to its historical volatility, State Bank of is 2.96 times less risky than Sri Havisha. It trades about 0.1 of its potential returns per unit of risk. Sri Havisha Hospitality is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  232.00  in Sri Havisha Hospitality on September 13, 2024 and sell it today you would earn a total of  48.00  from holding Sri Havisha Hospitality or generate 20.69% return on investment over 90 days.

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

State Bank of  vs.  Sri Havisha Hospitality

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.

Sri Havisha Hospitality

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sri Havisha Hospitality are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Sri Havisha sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with State Bank and Sri Havisha

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

The idea behind State Bank of and Sri Havisha Hospitality 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.