Correlation Between State Bank and Mtar Technologies

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

Diversification Opportunities for State Bank and Mtar Technologies

0.14

Correlation Coefficient

State Bank  Mtar Technologies

Average diversification

The 3 months correlation between State and Mtar is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Mtar Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mtar Technologies 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 Mtar Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mtar Technologies has no effect on the direction of State Bank i.e., State Bank and Mtar Technologies go up and down completely randomly.

Pair Corralation between State Bank and Mtar Technologies

Assuming the 90 days trading horizon State Bank of is expected to under-perform the Mtar Technologies. But the stock apears to be less risky and, when comparing its historical volatility, State Bank of is 2.71 times less risky than Mtar Technologies. The stock trades about -0.42 of its potential returns per unit of risk. The Mtar Technologies Limited is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  175,255  in Mtar Technologies Limited on October 10, 2024 and sell it today you would lose (1,725) from holding Mtar Technologies Limited or give up 0.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

State Bank of  vs.  Mtar Technologies Limited

State Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days State Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, State Bank is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Mtar Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with State Bank and Mtar Technologies

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

The idea behind State Bank of and Mtar Technologies Limited 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 Transaction History module to view history of all your transactions and understand their impact on performance.