Correlation Between Southern Steel and Melewar Industrial
Can any of the company-specific risk be diversified away by investing in both Southern 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 Southern 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 Southern Steel Bhd and Melewar Industrial Group, you can compare the effects of market volatilities on Southern 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 Southern Steel with a short position of Melewar Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Steel and Melewar Industrial.
Diversification Opportunities for Southern Steel and Melewar Industrial
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Southern and Melewar is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Southern Steel Bhd and Melewar Industrial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melewar Industrial 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 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 Southern Steel i.e., Southern Steel and Melewar Industrial go up and down completely randomly.
Pair Corralation between Southern Steel and Melewar Industrial
Assuming the 90 days trading horizon Southern Steel is expected to generate 3.12 times less return on investment than Melewar Industrial. But when comparing it to its historical volatility, Southern Steel Bhd is 1.77 times less risky than Melewar Industrial. It trades about 0.01 of its potential returns per unit of risk. Melewar Industrial Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 21.00 in Melewar Industrial Group on October 23, 2024 and sell it today you would earn a total of 0.00 from holding Melewar Industrial Group or generate 0.0% 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. Melewar Industrial Group
Performance |
| Timeline |
| Southern Steel Bhd |
| Melewar Industrial |
Southern Steel and Melewar Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Steel and Melewar Industrial
The main advantage of trading using opposite Southern Steel and Melewar Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern 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.| Southern Steel vs. Press Metal Bhd | Southern Steel vs. PMB Technology Bhd | Southern Steel vs. Pantech Group Holdings | Southern Steel vs. CSC Steel Holdings |
| Melewar Industrial vs. Press Metal Bhd | Melewar Industrial vs. PMB Technology Bhd | Melewar Industrial vs. Pantech Group Holdings | Melewar Industrial vs. CSC Steel Holdings |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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