Correlation Between Southern Steel and Steel Hawk
Can any of the company-specific risk be diversified away by investing in both Southern Steel and Steel Hawk 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 Southern Steel and Steel Hawk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Steel Bhd and Steel Hawk Berhad, you can compare the effects of market volatilities on Southern Steel and Steel Hawk 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 Southern Steel with a short position of Steel Hawk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Steel and Steel Hawk.
Diversification Opportunities for Southern Steel and Steel Hawk
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Southern and Steel is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Southern Steel Bhd and Steel Hawk Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Hawk Berhad and Southern 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 Southern Steel Bhd are associated (or correlated) with Steel Hawk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Hawk Berhad has no effect on the direction of Southern Steel i.e., Southern Steel and Steel Hawk go up and down completely randomly.
Pair Corralation between Southern Steel and Steel Hawk
Assuming the 90 days trading horizon Southern Steel Bhd is expected to under-perform the Steel Hawk. But the stock apears to be less risky and, when comparing its historical volatility, Southern Steel Bhd is 5.61 times less risky than Steel Hawk. The stock trades about -0.01 of its potential returns per unit of risk. The Steel Hawk Berhad is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 28.00 in Steel Hawk Berhad on November 3, 2024 and sell it today you would earn a total of 18.00 from holding Steel Hawk Berhad or generate 64.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Steel Bhd vs. Steel Hawk Berhad
Performance |
| Timeline |
| Southern Steel Bhd |
| Steel Hawk Berhad |
Southern Steel and Steel Hawk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Steel and Steel Hawk
The main advantage of trading using opposite Southern Steel and Steel Hawk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Steel position performs unexpectedly, Steel Hawk 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 Steel Hawk will offset losses from the drop in Steel Hawk's long position.| Southern Steel vs. Star Media Group | Southern Steel vs. Hong Leong Bank | Southern Steel vs. ECM Libra Financial | Southern Steel vs. Sports Toto Berhad |
| Steel Hawk vs. Star Media Group | Steel Hawk vs. Choo Bee Metal | Steel Hawk vs. CSC Steel Holdings | Steel Hawk vs. Sungei Bagan Rubber |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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