Correlation Between Southern Steel and Riverview Rubber
Can any of the company-specific risk be diversified away by investing in both Southern Steel and Riverview Rubber 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 Riverview Rubber 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 Riverview Rubber Estates, you can compare the effects of market volatilities on Southern Steel and Riverview Rubber 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 Riverview Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Steel and Riverview Rubber.
Diversification Opportunities for Southern Steel and Riverview Rubber
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Southern and Riverview is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Southern Steel Bhd and Riverview Rubber Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riverview Rubber Estates 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 Riverview Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riverview Rubber Estates has no effect on the direction of Southern Steel i.e., Southern Steel and Riverview Rubber go up and down completely randomly.
Pair Corralation between Southern Steel and Riverview Rubber
Assuming the 90 days trading horizon Southern Steel Bhd is expected to under-perform the Riverview Rubber. In addition to that, Southern Steel is 1.25 times more volatile than Riverview Rubber Estates. It trades about -0.21 of its total potential returns per unit of risk. Riverview Rubber Estates is currently generating about -0.03 per unit of volatility. If you would invest 310.00 in Riverview Rubber Estates on September 14, 2024 and sell it today you would lose (5.00) from holding Riverview Rubber Estates or give up 1.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Steel Bhd vs. Riverview Rubber Estates
Performance |
| Timeline |
| Southern Steel Bhd |
| Riverview Rubber Estates |
Southern Steel and Riverview Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Steel and Riverview Rubber
The main advantage of trading using opposite Southern Steel and Riverview Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Steel position performs unexpectedly, Riverview Rubber 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 Riverview Rubber will offset losses from the drop in Riverview Rubber's long position.| Southern Steel vs. Rubberex M | Southern Steel vs. CPE Technology Berhad | Southern Steel vs. Sports Toto Berhad | Southern Steel vs. Eonmetall Group Bhd |
| Riverview Rubber vs. Lyc Healthcare Bhd | Riverview Rubber vs. YX Precious Metals | Riverview Rubber vs. Southern Steel Bhd | Riverview Rubber vs. Malayan Banking 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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