Correlation Between State Bank and NBCC
Can any of the company-specific risk be diversified away by investing in both State Bank and NBCC 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 NBCC 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 NBCC Limited, you can compare the effects of market volatilities on State Bank and NBCC 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 NBCC. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and NBCC.
Diversification Opportunities for State Bank and NBCC
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between State and NBCC is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and NBCC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBCC Limited 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 NBCC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBCC Limited has no effect on the direction of State Bank i.e., State Bank and NBCC go up and down completely randomly.
Pair Corralation between State Bank and NBCC
Assuming the 90 days trading horizon State Bank of is expected to generate 0.4 times more return on investment than NBCC. However, State Bank of is 2.49 times less risky than NBCC. It trades about -0.03 of its potential returns per unit of risk. NBCC Limited is currently generating about -0.04 per unit of risk. If you would invest 79,965 in State Bank of on December 27, 2024 and sell it today you would lose (2,735) from holding State Bank of or give up 3.42% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
State Bank of vs. NBCC Limited
Performance |
Timeline |
State Bank |
NBCC Limited |
State Bank and NBCC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with State Bank and NBCC
The main advantage of trading using opposite State Bank and NBCC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, NBCC 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 NBCC will offset losses from the drop in NBCC's long position.State Bank vs. Kothari Petrochemicals Limited | State Bank vs. Dharani SugarsChemicals Limited | State Bank vs. Bodal Chemicals Limited | State Bank vs. Vishnu Chemicals Limited |
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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