Correlation Between PIE Industrial and Southern Steel
Can any of the company-specific risk be diversified away by investing in both PIE Industrial and Southern Steel 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 PIE Industrial and Southern Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PIE Industrial Bhd and Southern Steel Bhd, you can compare the effects of market volatilities on PIE Industrial and Southern Steel 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 PIE Industrial with a short position of Southern Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIE Industrial and Southern Steel.
Diversification Opportunities for PIE Industrial and Southern Steel
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PIE and Southern is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding PIE Industrial Bhd and Southern Steel Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Steel Bhd and PIE Industrial 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 PIE Industrial Bhd are associated (or correlated) with Southern Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Steel Bhd has no effect on the direction of PIE Industrial i.e., PIE Industrial and Southern Steel go up and down completely randomly.
Pair Corralation between PIE Industrial and Southern Steel
Assuming the 90 days trading horizon PIE Industrial Bhd is expected to generate 1.36 times more return on investment than Southern Steel. However, PIE Industrial is 1.36 times more volatile than Southern Steel Bhd. It trades about -0.07 of its potential returns per unit of risk. Southern Steel Bhd is currently generating about -0.25 per unit of risk. 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 |
PIE Industrial Bhd vs. Southern Steel Bhd
Performance |
| Timeline |
| PIE Industrial Bhd |
| Southern Steel Bhd |
PIE Industrial and Southern Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIE Industrial and Southern Steel
The main advantage of trading using opposite PIE Industrial and Southern Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIE Industrial position performs unexpectedly, Southern Steel 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 Southern Steel will offset losses from the drop in Southern Steel's long position.| PIE Industrial vs. Icon Offshore Bhd | PIE Industrial vs. Mycron Steel Bhd | PIE Industrial vs. Lysaght Galvanized Steel | PIE Industrial vs. Resintech Bhd |
| Southern Steel vs. Kawan Food Bhd | Southern Steel vs. Carlsberg Brewery Malaysia | Southern Steel vs. Cloudpoint Technology Berhad | Southern Steel vs. Choo Bee Metal |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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