Correlation Between State Bank and Sportking India

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

Diversification Opportunities for State Bank and Sportking India

0.47

Correlation Coefficient

State Bank  Sportking India

Very weak diversification

The 3 months correlation between State and Sportking is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Sportking India Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sportking India 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 Sportking India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sportking India has no effect on the direction of State Bank i.e., State Bank and Sportking India go up and down completely randomly.

Pair Corralation between State Bank and Sportking India

Assuming the 90 days trading horizon State Bank is expected to generate 92.35 times less return on investment than Sportking India. But when comparing it to its historical volatility, State Bank of is 56.65 times less risky than Sportking India. It trades about 0.06 of its potential returns per unit of risk. Sportking India Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  6,900  in Sportking India Limited on October 20, 2024 and sell it today you would earn a total of  3,531  from holding Sportking India Limited or generate 51.17% 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.  Sportking India 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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Sportking India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sportking India Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Sportking India is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with State Bank and Sportking India

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

The idea behind State Bank of and Sportking India 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.