Correlation Between Leader Steel and CSC Steel
Can any of the company-specific risk be diversified away by investing in both Leader Steel 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 Leader Steel and CSC Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leader Steel Holdings and CSC Steel Holdings, you can compare the effects of market volatilities on Leader Steel 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 Leader Steel with a short position of CSC Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leader Steel and CSC Steel.
Diversification Opportunities for Leader Steel and CSC Steel
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Leader and CSC is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Leader Steel Holdings 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 Leader 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 Leader Steel Holdings 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 Leader Steel i.e., Leader Steel and CSC Steel go up and down completely randomly.
Pair Corralation between Leader Steel and CSC Steel
Assuming the 90 days trading horizon Leader Steel Holdings is expected to generate 2.46 times more return on investment than CSC Steel. However, Leader Steel is 2.46 times more volatile than CSC Steel Holdings. It trades about -0.04 of its potential returns per unit of risk. CSC Steel Holdings is currently generating about -0.13 per unit of risk. If you would invest 41.00 in Leader Steel Holdings on October 25, 2024 and sell it today you would lose (1.00) from holding Leader Steel Holdings or give up 2.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leader Steel Holdings vs. CSC Steel Holdings
Performance |
| Timeline |
| Leader Steel Holdings |
| CSC Steel Holdings |
Leader Steel and CSC Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leader Steel and CSC Steel
The main advantage of trading using opposite Leader Steel and CSC Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leader Steel 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.| Leader Steel vs. Press Metal Bhd | Leader Steel vs. PMB Technology Bhd | Leader Steel vs. Pantech Group Holdings | Leader Steel vs. CSC Steel Holdings |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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