Correlation Between CSC Steel and Tex Cycle
Can any of the company-specific risk be diversified away by investing in both CSC Steel and Tex Cycle 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 CSC Steel and Tex Cycle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSC Steel Holdings and Tex Cycle Technology, you can compare the effects of market volatilities on CSC Steel and Tex Cycle 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 CSC Steel with a short position of Tex Cycle. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSC Steel and Tex Cycle.
Diversification Opportunities for CSC Steel and Tex Cycle
Very poor diversification
The 3 months correlation between CSC and Tex is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding CSC Steel Holdings and Tex Cycle Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tex Cycle Technology and CSC 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 CSC Steel Holdings are associated (or correlated) with Tex Cycle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tex Cycle Technology has no effect on the direction of CSC Steel i.e., CSC Steel and Tex Cycle go up and down completely randomly.
Pair Corralation between CSC Steel and Tex Cycle
Assuming the 90 days trading horizon CSC Steel is expected to generate 8.07 times less return on investment than Tex Cycle. But when comparing it to its historical volatility, CSC Steel Holdings is 2.34 times less risky than Tex Cycle. It trades about 0.02 of its potential returns per unit of risk. Tex Cycle Technology is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 41.00 in Tex Cycle Technology on September 2, 2024 and sell it today you would earn a total of 63.00 from holding Tex Cycle Technology or generate 153.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSC Steel Holdings vs. Tex Cycle Technology
Performance |
| Timeline |
| CSC Steel Holdings |
| Tex Cycle Technology |
CSC Steel and Tex Cycle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSC Steel and Tex Cycle
The main advantage of trading using opposite CSC Steel and Tex Cycle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSC Steel position performs unexpectedly, Tex Cycle 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 Tex Cycle will offset losses from the drop in Tex Cycle's long position.The idea behind CSC Steel Holdings and Tex Cycle Technology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Tex Cycle vs. Digistar Bhd | Tex Cycle vs. Minetech Resources Bhd | Tex Cycle vs. Swift Haulage Bhd | Tex Cycle vs. Bina Darulaman 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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