Correlation Between Leader Steel and Southern Steel
Can any of the company-specific risk be diversified away by investing in both Leader Steel 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 Leader Steel and Southern 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 Southern Steel Bhd, you can compare the effects of market volatilities on Leader Steel 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 Leader Steel with a short position of Southern Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leader Steel and Southern Steel.
Diversification Opportunities for Leader Steel and Southern Steel
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Leader and Southern is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Leader Steel Holdings 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 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 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 Leader Steel i.e., Leader Steel and Southern Steel go up and down completely randomly.
Pair Corralation between Leader Steel and Southern Steel
Assuming the 90 days trading horizon Leader Steel is expected to generate 1.14 times less return on investment than Southern Steel. In addition to that, Leader Steel is 1.12 times more volatile than Southern Steel Bhd. It trades about 0.01 of its total potential returns per unit of risk. Southern Steel Bhd is currently generating about 0.01 per unit of volatility. If you would invest 61.00 in Southern Steel Bhd on September 3, 2024 and sell it today you would lose (6.00) from holding Southern Steel Bhd or give up 9.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leader Steel Holdings vs. Southern Steel Bhd
Performance |
| Timeline |
| Leader Steel Holdings |
| Southern Steel Bhd |
Leader Steel and Southern Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leader Steel and Southern Steel
The main advantage of trading using opposite Leader Steel and Southern Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leader Steel 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.| Leader Steel vs. Press Metal Bhd | Leader Steel vs. Pantech Group Holdings | Leader Steel vs. CSC Steel Holdings | Leader Steel vs. Malaysia Steel Works |
| Southern Steel vs. Press Metal Bhd | Southern Steel vs. Pantech Group Holdings | Southern Steel vs. CSC Steel Holdings | Southern Steel vs. Malaysia Steel Works |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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