Correlation Between SFP Tech and Southern Steel
Can any of the company-specific risk be diversified away by investing in both SFP Tech 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 SFP Tech and Southern Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SFP Tech Holdings and Southern Steel Bhd, you can compare the effects of market volatilities on SFP Tech 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 SFP Tech with a short position of Southern Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of SFP Tech and Southern Steel.
Diversification Opportunities for SFP Tech and Southern Steel
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SFP and Southern is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding SFP Tech Holdings 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 SFP Tech 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 SFP Tech Holdings 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 SFP Tech i.e., SFP Tech and Southern Steel go up and down completely randomly.
Pair Corralation between SFP Tech and Southern Steel
Assuming the 90 days trading horizon SFP Tech Holdings is expected to under-perform the Southern Steel. In addition to that, SFP Tech is 1.2 times more volatile than Southern Steel Bhd. It trades about -0.23 of its total potential returns per unit of risk. Southern Steel Bhd is currently generating about -0.1 per unit of volatility. If you would invest 53.00 in Southern Steel Bhd on November 9, 2024 and sell it today you would lose (2.00) from holding Southern Steel Bhd or give up 3.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SFP Tech Holdings vs. Southern Steel Bhd
Performance |
| Timeline |
| SFP Tech Holdings |
| Southern Steel Bhd |
SFP Tech and Southern Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SFP Tech and Southern Steel
The main advantage of trading using opposite SFP Tech and Southern Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SFP Tech 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.| SFP Tech vs. PIE Industrial Bhd | SFP Tech vs. K One Technology Bhd | SFP Tech vs. Amalgamated Industrial Steel | SFP Tech vs. Resintech Bhd |
| Southern Steel vs. Star Media Group | Southern Steel vs. Computer Forms Bhd | Southern Steel vs. Awanbiru Technology Bhd | Southern Steel vs. Petronas Chemicals Group |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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