Correlation Between CSC Steel and Melewar Industrial
Can any of the company-specific risk be diversified away by investing in both CSC Steel and Melewar Industrial 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 Melewar Industrial 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 Melewar Industrial Group, you can compare the effects of market volatilities on CSC Steel and Melewar Industrial 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 Melewar Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSC Steel and Melewar Industrial.
Diversification Opportunities for CSC Steel and Melewar Industrial
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CSC and Melewar is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding CSC Steel Holdings and Melewar Industrial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melewar Industrial 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 Melewar Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melewar Industrial has no effect on the direction of CSC Steel i.e., CSC Steel and Melewar Industrial go up and down completely randomly.
Pair Corralation between CSC Steel and Melewar Industrial
Assuming the 90 days trading horizon CSC Steel Holdings is expected to generate 0.46 times more return on investment than Melewar Industrial. However, CSC Steel Holdings is 2.16 times less risky than Melewar Industrial. It trades about 0.02 of its potential returns per unit of risk. Melewar Industrial Group is currently generating about 0.0 per unit of risk. If you would invest 105.00 in CSC Steel Holdings on September 3, 2024 and sell it today you would earn a total of 12.00 from holding CSC Steel Holdings or generate 11.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSC Steel Holdings vs. Melewar Industrial Group
Performance |
| Timeline |
| CSC Steel Holdings |
| Melewar Industrial |
CSC Steel and Melewar Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSC Steel and Melewar Industrial
The main advantage of trading using opposite CSC Steel and Melewar Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSC Steel position performs unexpectedly, Melewar Industrial 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 Melewar Industrial will offset losses from the drop in Melewar Industrial's long position.| CSC Steel vs. Press Metal Bhd | CSC Steel vs. Malaysia Steel Works | CSC Steel vs. Choo Bee Metal | CSC Steel vs. Eonmetall Group Bhd |
| Melewar Industrial vs. Press Metal Bhd | Melewar Industrial vs. CSC Steel Holdings | Melewar Industrial vs. Malaysia Steel Works | Melewar Industrial vs. Choo Bee Metal |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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