Correlation Between TATA SUMER and State Bank

Can any of the company-specific risk be diversified away by investing in both TATA SUMER and State Bank 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 TATA SUMER and State Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TATA SUMER PRODUCTS and State Bank of, you can compare the effects of market volatilities on TATA SUMER and State Bank 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 TATA SUMER with a short position of State Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of TATA SUMER and State Bank.

Diversification Opportunities for TATA SUMER and State Bank

-0.44

Correlation Coefficient

TATA SUMER  State Bank

Very good diversification

The 3 months correlation between TATA and State is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding TATA SUMER PRODUCTS and State Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Bank and TATA SUMER 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 TATA SUMER PRODUCTS are associated (or correlated) with State Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Bank has no effect on the direction of TATA SUMER i.e., TATA SUMER and State Bank go up and down completely randomly.

Pair Corralation between TATA SUMER and State Bank

Assuming the 90 days trading horizon TATA SUMER is expected to generate 1.45 times less return on investment than State Bank. But when comparing it to its historical volatility, TATA SUMER PRODUCTS is 1.12 times less risky than State Bank. It trades about 0.06 of its potential returns per unit of risk. State Bank of is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  49,955  in State Bank of on October 5, 2024 and sell it today you would earn a total of  30,165  from holding State Bank of or generate 60.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.78%
Values	Daily Returns

TATA SUMER PRODUCTS  vs.  State Bank of

TATA SUMER PRODUCTS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TATA SUMER PRODUCTS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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

Pair Trading with TATA SUMER and State Bank

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

The idea behind TATA SUMER PRODUCTS and State Bank of 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.