Correlation Between Lion Forest and CSC Steel
Can any of the company-specific risk be diversified away by investing in both Lion Forest and CSC 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 Lion Forest and CSC Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Forest Industries and CSC Steel Holdings, you can compare the effects of market volatilities on Lion Forest and CSC 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 Lion Forest with a short position of CSC Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Forest and CSC Steel.
Diversification Opportunities for Lion Forest and CSC Steel
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lion and CSC is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lion Forest Industries and CSC Steel Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSC Steel Holdings and Lion Forest 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 Lion Forest Industries are associated (or correlated) with CSC Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSC Steel Holdings has no effect on the direction of Lion Forest i.e., Lion Forest and CSC Steel go up and down completely randomly.
Pair Corralation between Lion Forest and CSC Steel
Assuming the 90 days trading horizon Lion Forest Industries is expected to under-perform the CSC Steel. In addition to that, Lion Forest is 2.87 times more volatile than CSC Steel Holdings. It trades about -0.06 of its total potential returns per unit of risk. CSC Steel Holdings is currently generating about -0.03 per unit of volatility. If you would invest 118.00 in CSC Steel Holdings on September 2, 2024 and sell it today you would lose (1.00) from holding CSC Steel Holdings or give up 0.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Forest Industries vs. CSC Steel Holdings
Performance |
| Timeline |
| Lion Forest Industries |
| CSC Steel Holdings |
Lion Forest and CSC Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Forest and CSC Steel
The main advantage of trading using opposite Lion Forest and CSC Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Forest position performs unexpectedly, CSC 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 CSC Steel will offset losses from the drop in CSC Steel's long position.| Lion Forest vs. CSC Steel Holdings | Lion Forest vs. Mycron Steel Bhd | Lion Forest vs. Sports Toto Berhad | Lion Forest vs. Hong Leong Bank |
| CSC Steel vs. Pantech Group Holdings | CSC Steel vs. Coraza Integrated Technology | CSC Steel vs. Eonmetall Group 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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