Correlation Between CSC Steel and ES Ceramics
Can any of the company-specific risk be diversified away by investing in both CSC Steel and ES Ceramics 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 ES Ceramics 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 ES Ceramics Technology, you can compare the effects of market volatilities on CSC Steel and ES Ceramics 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 ES Ceramics. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSC Steel and ES Ceramics.
Diversification Opportunities for CSC Steel and ES Ceramics
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CSC and 0100 is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding CSC Steel Holdings and ES Ceramics Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ES Ceramics 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 ES Ceramics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ES Ceramics Technology has no effect on the direction of CSC Steel i.e., CSC Steel and ES Ceramics go up and down completely randomly.
Pair Corralation between CSC Steel and ES Ceramics
Assuming the 90 days trading horizon CSC Steel Holdings is expected to generate 0.23 times more return on investment than ES Ceramics. However, CSC Steel Holdings is 4.32 times less risky than ES Ceramics. It trades about 0.13 of its potential returns per unit of risk. ES Ceramics Technology is currently generating about -0.14 per unit of risk. If you would invest 112.00 in CSC Steel Holdings on November 28, 2024 and sell it today you would earn a total of 3.00 from holding CSC Steel Holdings or generate 2.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSC Steel Holdings vs. ES Ceramics Technology
Performance |
| Timeline |
| CSC Steel Holdings |
| ES Ceramics Technology |
CSC Steel and ES Ceramics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSC Steel and ES Ceramics
The main advantage of trading using opposite CSC Steel and ES Ceramics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSC Steel position performs unexpectedly, ES Ceramics 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 ES Ceramics will offset losses from the drop in ES Ceramics' long position.| CSC Steel vs. Eversafe Rubber Bhd | CSC Steel vs. Systech Bhd | CSC Steel vs. Dataprep Holdings Bhd | CSC Steel vs. MI Technovation Bhd |
| ES Ceramics vs. Press Metal Bhd | ES Ceramics vs. Carlsberg Brewery Malaysia | ES Ceramics vs. Kossan Rubber Industries | ES Ceramics vs. Ho Hup Construction |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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