Correlation Between ES Ceramics and Southern Steel
Can any of the company-specific risk be diversified away by investing in both ES Ceramics and Southern 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 ES Ceramics and Southern Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ES Ceramics Technology and Southern Steel Bhd, you can compare the effects of market volatilities on ES Ceramics and Southern 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 ES Ceramics with a short position of Southern Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of ES Ceramics and Southern Steel.
Diversification Opportunities for ES Ceramics and Southern Steel
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between 0100 and Southern is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding ES Ceramics Technology and Southern Steel Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Steel Bhd and ES Ceramics 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 ES Ceramics Technology are associated (or correlated) with Southern Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Steel Bhd has no effect on the direction of ES Ceramics i.e., ES Ceramics and Southern Steel go up and down completely randomly.
Pair Corralation between ES Ceramics and Southern Steel
Assuming the 90 days trading horizon ES Ceramics Technology is expected to under-perform the Southern Steel. In addition to that, ES Ceramics is 2.54 times more volatile than Southern Steel Bhd. It trades about -0.06 of its total potential returns per unit of risk. Southern Steel Bhd is currently generating about -0.06 per unit of volatility. If you would invest 52.00 in Southern Steel Bhd on October 22, 2024 and sell it today you would lose (1.00) from holding Southern Steel Bhd or give up 1.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ES Ceramics Technology vs. Southern Steel Bhd
Performance |
| Timeline |
| ES Ceramics Technology |
| Southern Steel Bhd |
ES Ceramics and Southern Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ES Ceramics and Southern Steel
The main advantage of trading using opposite ES Ceramics and Southern Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ES Ceramics position performs unexpectedly, Southern 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 Southern Steel will offset losses from the drop in Southern Steel's long position.| ES Ceramics vs. Apollo Food Holdings | ES Ceramics vs. Lotte Chemical Titan | ES Ceramics vs. Sports Toto Berhad | ES Ceramics vs. Diversified Gateway Solutions |
| Southern Steel vs. Supercomnet Technologies Bhd | Southern Steel vs. CPE Technology Berhad | Southern Steel vs. ES Ceramics Technology | Southern Steel vs. Greatech Technology Bhd |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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