Correlation Between Southern Steel and PIE Industrial
Can any of the company-specific risk be diversified away by investing in both Southern Steel and PIE 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 PIE 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 PIE Industrial Bhd, you can compare the effects of market volatilities on Southern Steel and PIE 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 PIE Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Steel and PIE Industrial.
Diversification Opportunities for Southern Steel and PIE Industrial
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Southern and PIE is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Southern Steel Bhd and PIE Industrial Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIE Industrial Bhd 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 PIE Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIE Industrial Bhd has no effect on the direction of Southern Steel i.e., Southern Steel and PIE Industrial go up and down completely randomly.
Pair Corralation between Southern Steel and PIE Industrial
Assuming the 90 days trading horizon Southern Steel Bhd is expected to under-perform the PIE Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Southern Steel Bhd is 1.36 times less risky than PIE Industrial. The stock trades about -0.25 of its potential returns per unit of risk. The PIE Industrial Bhd is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 467.00 in PIE Industrial Bhd on November 28, 2024 and sell it today you would lose (17.00) from holding PIE Industrial Bhd or give up 3.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Steel Bhd vs. PIE Industrial Bhd
Performance |
| Timeline |
| Southern Steel Bhd |
| PIE Industrial Bhd |
Southern Steel and PIE Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Steel and PIE Industrial
The main advantage of trading using opposite Southern Steel and PIE Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Steel position performs unexpectedly, PIE 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 PIE Industrial will offset losses from the drop in PIE Industrial's long position.| Southern Steel vs. Kawan Food Bhd | Southern Steel vs. Carlsberg Brewery Malaysia | Southern Steel vs. Cloudpoint Technology Berhad | Southern Steel vs. Choo Bee Metal |
| PIE Industrial vs. Icon Offshore Bhd | PIE Industrial vs. Mycron Steel Bhd | PIE Industrial vs. Lysaght Galvanized Steel | PIE Industrial vs. Resintech 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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