Correlation Between State Bank and Silly Monks

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

Diversification Opportunities for State Bank and Silly Monks

-0.32

Correlation Coefficient

State Bank  Silly Monks

Very good diversification

The 3 months correlation between State and Silly is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Silly Monks Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silly Monks Entertainment 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 Silly Monks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silly Monks Entertainment has no effect on the direction of State Bank i.e., State Bank and Silly Monks go up and down completely randomly.

Pair Corralation between State Bank and Silly Monks

Assuming the 90 days trading horizon State Bank is expected to generate 1.97 times less return on investment than Silly Monks. But when comparing it to its historical volatility, State Bank of is 1.67 times less risky than Silly Monks. It trades about 0.13 of its potential returns per unit of risk. Silly Monks Entertainment is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,141  in Silly Monks Entertainment on September 20, 2024 and sell it today you would earn a total of  184.00  from holding Silly Monks Entertainment or generate 8.59% return on investment over 90 days.

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

State Bank of  vs.  Silly Monks Entertainment

State Bank

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in State Bank of are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, State Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Silly Monks Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silly Monks Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Silly Monks is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with State Bank and Silly Monks

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

The idea behind State Bank of and Silly Monks Entertainment 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.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.