Correlation Between Southern Steel and Press Metal
Can any of the company-specific risk be diversified away by investing in both Southern Steel and Press Metal 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 Press Metal 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 Press Metal Bhd, you can compare the effects of market volatilities on Southern Steel and Press Metal 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 Press Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Steel and Press Metal.
Diversification Opportunities for Southern Steel and Press Metal
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Southern and Press is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Southern Steel Bhd and Press Metal Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Press Metal 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 Press Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Press Metal Bhd has no effect on the direction of Southern Steel i.e., Southern Steel and Press Metal go up and down completely randomly.
Pair Corralation between Southern Steel and Press Metal
Assuming the 90 days trading horizon Southern Steel Bhd is expected to generate 2.25 times more return on investment than Press Metal. However, Southern Steel is 2.25 times more volatile than Press Metal Bhd. It trades about 0.01 of its potential returns per unit of risk. Press Metal Bhd is currently generating about 0.01 per unit of risk. If you would invest 61.00 in Southern Steel Bhd on August 24, 2024 and sell it today you would lose (7.00) from holding Southern Steel Bhd or give up 11.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Steel Bhd vs. Press Metal Bhd
Performance |
| Timeline |
| Southern Steel Bhd |
| Press Metal Bhd |
Southern Steel and Press Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Steel and Press Metal
The main advantage of trading using opposite Southern Steel and Press Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Steel position performs unexpectedly, Press Metal 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 Press Metal will offset losses from the drop in Press Metal'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 |
| Press Metal vs. Cloudpoint Technology Berhad | Press Metal vs. Kossan Rubber Industries | Press Metal vs. Radiant Globaltech Bhd | Press Metal vs. MClean Technologies 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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