Correlation Between Mayer Steel and S Tech
Can any of the company-specific risk be diversified away by investing in both Mayer Steel and S Tech 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 Mayer Steel and S Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mayer Steel Pipe and S Tech Corp, you can compare the effects of market volatilities on Mayer Steel and S Tech 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 Mayer Steel with a short position of S Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mayer Steel and S Tech.
Diversification Opportunities for Mayer Steel and S Tech
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Mayer and 1584 is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Mayer Steel Pipe and S Tech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on S Tech Corp and Mayer Steel 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 Mayer Steel Pipe are associated (or correlated) with S Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of S Tech Corp has no effect on the direction of Mayer Steel i.e., Mayer Steel and S Tech go up and down completely randomly.
Pair Corralation between Mayer Steel and S Tech
Assuming the 90 days trading horizon Mayer Steel Pipe is expected to generate 0.75 times more return on investment than S Tech. However, Mayer Steel Pipe is 1.33 times less risky than S Tech. It trades about 0.34 of its potential returns per unit of risk. S Tech Corp is currently generating about -0.16 per unit of risk. If you would invest 2,750 in Mayer Steel Pipe on September 1, 2024 and sell it today you would earn a total of 185.00 from holding Mayer Steel Pipe or generate 6.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mayer Steel Pipe vs. S Tech Corp
Performance |
| Timeline |
| Mayer Steel Pipe |
| S Tech Corp |
Mayer Steel and S Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mayer Steel and S Tech
The main advantage of trading using opposite Mayer Steel and S Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mayer Steel position performs unexpectedly, S Tech 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 S Tech will offset losses from the drop in S Tech's long position.| Mayer Steel vs. Basso Industry Corp | Mayer Steel vs. Chung Hsin Electric Machinery | Mayer Steel vs. TYC Brother Industrial | Mayer Steel vs. TECO Electric Machinery |
| S Tech vs. Yang Ming Marine | S Tech vs. Wan Hai Lines | S Tech vs. Hsin Kuang Steel | S Tech vs. Evergreen Marine Corp |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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