Correlation Between EA Technique and Southern Steel
Can any of the company-specific risk be diversified away by investing in both EA Technique and Southern 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 EA Technique and Southern Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EA Technique M and Southern Steel Bhd, you can compare the effects of market volatilities on EA Technique and Southern 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 EA Technique with a short position of Southern Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of EA Technique and Southern Steel.
Diversification Opportunities for EA Technique and Southern Steel
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 5259 and Southern is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding EA Technique M and Southern Steel Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Steel Bhd and EA Technique 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 EA Technique M are associated (or correlated) with Southern Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Steel Bhd has no effect on the direction of EA Technique i.e., EA Technique and Southern Steel go up and down completely randomly.
Pair Corralation between EA Technique and Southern Steel
Assuming the 90 days trading horizon EA Technique M is expected to generate 1.72 times more return on investment than Southern Steel. However, EA Technique is 1.72 times more volatile than Southern Steel Bhd. It trades about 0.03 of its potential returns per unit of risk. Southern Steel Bhd is currently generating about -0.12 per unit of risk. If you would invest 30.00 in EA Technique M on November 25, 2024 and sell it today you would earn a total of 1.00 from holding EA Technique M or generate 3.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.36% |
Values | Daily Returns |
EA Technique M vs. Southern Steel Bhd
Performance |
Timeline |
EA Technique M |
Southern Steel Bhd |
EA Technique and Southern Steel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with EA Technique and Southern Steel
The main advantage of trading using opposite EA Technique and Southern Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EA Technique position performs unexpectedly, Southern 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 Southern Steel will offset losses from the drop in Southern Steel's long position.EA Technique vs. Bank Islam Malaysia | ||
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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