Correlation Between State Bank and Xchanging Solutions

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

Diversification Opportunities for State Bank and Xchanging Solutions

-0.09

Correlation Coefficient

State Bank  Xchanging Solutions

Good diversification

The 3 months correlation between State and Xchanging is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Xchanging Solutions Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xchanging Solutions 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 Xchanging Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xchanging Solutions has no effect on the direction of State Bank i.e., State Bank and Xchanging Solutions go up and down completely randomly.

Pair Corralation between State Bank and Xchanging Solutions

Assuming the 90 days trading horizon State Bank of is expected to under-perform the Xchanging Solutions. But the stock apears to be less risky and, when comparing its historical volatility, State Bank of is 1.6 times less risky than Xchanging Solutions. The stock trades about -0.01 of its potential returns per unit of risk. The Xchanging Solutions Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  10,585  in Xchanging Solutions Limited on September 23, 2024 and sell it today you would earn a total of  366.00  from holding Xchanging Solutions Limited or generate 3.46% 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.  Xchanging Solutions Limited

State Bank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in State Bank of are ranked lower than 1 (%) 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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Xchanging Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xchanging Solutions Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with State Bank and Xchanging Solutions

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

The idea behind State Bank of and Xchanging Solutions 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..