Correlation Between Daya Materials and CSC Steel
Can any of the company-specific risk be diversified away by investing in both Daya Materials and CSC Steel 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 Daya Materials and CSC Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daya Materials Bhd and CSC Steel Holdings, you can compare the effects of market volatilities on Daya Materials and CSC Steel 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 Daya Materials with a short position of CSC Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daya Materials and CSC Steel.
Diversification Opportunities for Daya Materials and CSC Steel
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Daya and CSC is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Daya Materials Bhd and CSC Steel Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSC Steel Holdings and Daya Materials 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 Daya Materials Bhd are associated (or correlated) with CSC Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSC Steel Holdings has no effect on the direction of Daya Materials i.e., Daya Materials and CSC Steel go up and down completely randomly.
Pair Corralation between Daya Materials and CSC Steel
Assuming the 90 days trading horizon Daya Materials Bhd is expected to generate 6.35 times more return on investment than CSC Steel. However, Daya Materials is 6.35 times more volatile than CSC Steel Holdings. It trades about 0.11 of its potential returns per unit of risk. CSC Steel Holdings is currently generating about -0.04 per unit of risk. If you would invest 10.00 in Daya Materials Bhd on October 11, 2024 and sell it today you would earn a total of 1.00 from holding Daya Materials Bhd or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daya Materials Bhd vs. CSC Steel Holdings
Performance |
| Timeline |
| Daya Materials Bhd |
| CSC Steel Holdings |
Daya Materials and CSC Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daya Materials and CSC Steel
The main advantage of trading using opposite Daya Materials and CSC Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daya Materials position performs unexpectedly, CSC Steel 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 CSC Steel will offset losses from the drop in CSC Steel's long position.| Daya Materials vs. MI Technovation Bhd | Daya Materials vs. Silver Ridge Holdings | Daya Materials vs. CPE Technology Berhad | Daya Materials vs. TAS Offshore Bhd |
| CSC Steel vs. Eversafe Rubber Bhd | CSC Steel vs. BP Plastics Holding | CSC Steel vs. Public Packages Holdings | CSC Steel vs. YX Precious Metals |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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