Correlation Between State Bank and Zee Entertainment

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

Diversification Opportunities for State Bank and Zee Entertainment

0.46

Correlation Coefficient

State Bank  Zee Entertainment

Very weak diversification

The 3 months correlation between State and Zee is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Zee Entertainment Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zee 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 Zee Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zee Entertainment has no effect on the direction of State Bank i.e., State Bank and Zee Entertainment go up and down completely randomly.

Pair Corralation between State Bank and Zee Entertainment

Assuming the 90 days trading horizon State Bank of is expected to generate 0.63 times more return on investment than Zee Entertainment. However, State Bank of is 1.6 times less risky than Zee Entertainment. It trades about -0.37 of its potential returns per unit of risk. Zee Entertainment Enterprises is currently generating about -0.33 per unit of risk. If you would invest  85,970  in State Bank of on October 5, 2024 and sell it today you would lose (6,630) from holding State Bank of or give up 7.71% of portfolio value over 90 days.

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

State Bank of  vs.  Zee Entertainment Enterprises

State Bank

Risk-Adjusted Performance

3 of 100

Insignificant

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Zee Entertainment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zee Entertainment Enterprises are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Zee Entertainment is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with State Bank and Zee Entertainment

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

The idea behind State Bank of and Zee Entertainment Enterprises 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.