Correlation Between Consolidated Construction and Electrosteel Castings
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By analyzing existing cross correlation between Consolidated Construction Consortium and Electrosteel Castings Limited, you can compare the effects of market volatilities on Consolidated Construction and Electrosteel Castings 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 Consolidated Construction with a short position of Electrosteel Castings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Construction and Electrosteel Castings.
Diversification Opportunities for Consolidated Construction and Electrosteel Castings
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Consolidated and Electrosteel is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Construction Cons and Electrosteel Castings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrosteel Castings and Consolidated Construction 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 Consolidated Construction Consortium are associated (or correlated) with Electrosteel Castings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrosteel Castings has no effect on the direction of Consolidated Construction i.e., Consolidated Construction and Electrosteel Castings go up and down completely randomly.
Pair Corralation between Consolidated Construction and Electrosteel Castings
Assuming the 90 days trading horizon Consolidated Construction Consortium is expected to generate 1.09 times more return on investment than Electrosteel Castings. However, Consolidated Construction is 1.09 times more volatile than Electrosteel Castings Limited. It trades about -0.02 of its potential returns per unit of risk. Electrosteel Castings Limited is currently generating about -0.22 per unit of risk. If you would invest 1,895 in Consolidated Construction Consortium on October 30, 2024 and sell it today you would lose (88.00) from holding Consolidated Construction Consortium or give up 4.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consolidated Construction Cons vs. Electrosteel Castings Limited
Performance |
| Timeline |
| Consolidated Construction |
| Electrosteel Castings |
Consolidated Construction and Electrosteel Castings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consolidated Construction and Electrosteel Castings
The main advantage of trading using opposite Consolidated Construction and Electrosteel Castings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Construction position performs unexpectedly, Electrosteel Castings 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 Electrosteel Castings will offset losses from the drop in Electrosteel Castings' long position.The idea behind Consolidated Construction Consortium and Electrosteel Castings Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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