Correlation Between Fine Organic and State Bank

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

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

Diversification Opportunities for Fine Organic and State Bank

0.67

Correlation Coefficient

Fine Organic  State Bank

Poor diversification

The 3 months correlation between Fine and State is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Fine Organic Industries and State Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Bank and Fine Organic 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 Fine Organic Industries 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 Fine Organic i.e., Fine Organic and State Bank go up and down completely randomly.

Pair Corralation between Fine Organic and State Bank

Assuming the 90 days trading horizon Fine Organic is expected to generate 3.19 times less return on investment than State Bank. In addition to that, Fine Organic is 1.12 times more volatile than State Bank of. It trades about 0.05 of its total potential returns per unit of risk. State Bank of is currently generating about 0.18 per unit of volatility. If you would invest  73,074  in State Bank of on February 28, 2024 and sell it today you would earn a total of  10,296  from holding State Bank of or generate 14.09% return on investment over 90 days.

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

Fine Organic Industries  vs.  State Bank of

Fine Organic Industries

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fine Organic Industries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Fine Organic is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

State Bank

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in State Bank of are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, State Bank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fine Organic and State Bank

The main advantage of trading using opposite Fine Organic and State Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fine Organic 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 Fine Organic Industries 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.