Correlation Between State Bank and V Mart

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

Diversification Opportunities for State Bank and V Mart

-0.24

Correlation Coefficient

State Bank  V Mart

Very good diversification

The 3 months correlation between State and VMART is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and V Mart Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on V Mart Retail 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 V Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of V Mart Retail has no effect on the direction of State Bank i.e., State Bank and V Mart go up and down completely randomly.

Pair Corralation between State Bank and V Mart

Assuming the 90 days trading horizon State Bank is expected to generate 2.15 times less return on investment than V Mart. But when comparing it to its historical volatility, State Bank of is 1.31 times less risky than V Mart. It trades about 0.07 of its potential returns per unit of risk. V Mart Retail Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  215,790  in V Mart Retail Limited on October 5, 2024 and sell it today you would earn a total of  170,455  from holding V Mart Retail Limited or generate 78.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.18%
Values	Daily Returns

State Bank of  vs.  V Mart Retail Limited

State Bank

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in State Bank of are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

V Mart Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days V Mart Retail Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with State Bank and V Mart

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

The idea behind State Bank of and V Mart Retail 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.