Correlation Between 2S Metal and CSP Steel
Can any of the company-specific risk be diversified away by investing in both 2S Metal and CSP 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 2S Metal and CSP Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 2S Metal Public and CSP Steel Center, you can compare the effects of market volatilities on 2S Metal and CSP 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 2S Metal with a short position of CSP Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of 2S Metal and CSP Steel.
Diversification Opportunities for 2S Metal and CSP Steel
Almost no diversification
The 3 months correlation between 2S Metal and CSP is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding 2S Metal Public and CSP Steel Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSP Steel Center and 2S Metal 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 2S Metal Public are associated (or correlated) with CSP Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSP Steel Center has no effect on the direction of 2S Metal i.e., 2S Metal and CSP Steel go up and down completely randomly.
Pair Corralation between 2S Metal and CSP Steel
Assuming the 90 days horizon 2S Metal Public is expected to under-perform the CSP Steel. But the stock apears to be less risky and, when comparing its historical volatility, 2S Metal Public is 43.49 times less risky than CSP Steel. The stock trades about -0.02 of its potential returns per unit of risk. The CSP Steel Center is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 138.00 in CSP Steel Center on October 13, 2024 and sell it today you would lose (79.00) from holding CSP Steel Center or give up 57.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
2S Metal Public vs. CSP Steel Center
Performance |
| Timeline |
| 2S Metal Public |
| CSP Steel Center |
2S Metal and CSP Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 2S Metal and CSP Steel
The main advantage of trading using opposite 2S Metal and CSP Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 2S Metal position performs unexpectedly, CSP 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 CSP Steel will offset losses from the drop in CSP Steel's long position.| 2S Metal vs. Diamond Building Products | 2S Metal vs. MCS Steel Public | 2S Metal vs. Asia Green Energy | 2S Metal vs. Hwa Fong Rubber |
| CSP Steel vs. Asia Metal Public | CSP Steel vs. 2S Metal Public | CSP Steel vs. Bangsaphan Barmill Public | CSP Steel vs. Agripure Holdings Public |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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