hi 

String is a Immutable object,that is 
string is an object not a datatype variable.

From the above example

String s=s1 //means it will create a new objet s with the 
value raj,not change the value.

Note:whenever u edit or concatinate the string internally 
it will create a new object,but not chang that object.

Thank You ramaraju....

Immutable means if you apply any methods to a String, it
would not affect the original String you created.  
For eg,

String s = "test";
s.concat(" two");
System.out.println(s);

The output is still "test" and not "test two";
Java pass by reference.  If you use = to assign the string
to another string, then the reference would change. 
Therefore your example changes the string.