Correlation Between City Steel and Capital Engineering
Can any of the company-specific risk be diversified away by investing in both City Steel and Capital Engineering 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 City Steel and Capital Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between City Steel Public and Capital Engineering Network, you can compare the effects of market volatilities on City Steel and Capital Engineering 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 City Steel with a short position of Capital Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Steel and Capital Engineering.
Diversification Opportunities for City Steel and Capital Engineering
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between City and Capital is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding City Steel Public and Capital Engineering Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Engineering and City 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 City Steel Public are associated (or correlated) with Capital Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Engineering has no effect on the direction of City Steel i.e., City Steel and Capital Engineering go up and down completely randomly.
Pair Corralation between City Steel and Capital Engineering
Assuming the 90 days trading horizon City Steel Public is expected to generate 4.06 times more return on investment than Capital Engineering. However, City Steel is 4.06 times more volatile than Capital Engineering Network. It trades about -0.05 of its potential returns per unit of risk. Capital Engineering Network is currently generating about -0.38 per unit of risk. If you would invest 187.00 in City Steel Public on October 26, 2024 and sell it today you would lose (4.00) from holding City Steel Public or give up 2.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
City Steel Public vs. Capital Engineering Network
Performance |
| Timeline |
| City Steel Public |
| Capital Engineering |
City Steel and Capital Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Steel and Capital Engineering
The main advantage of trading using opposite City Steel and Capital Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Steel position performs unexpectedly, Capital Engineering 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 Capital Engineering will offset losses from the drop in Capital Engineering's long position.| City Steel vs. Capital Engineering Network | City Steel vs. Bangsaphan Barmill Public | City Steel vs. CSP Steel Center | City Steel vs. Chukai Public |
| Capital Engineering vs. Christiani Nielsen Public | Capital Engineering vs. Country Group Holdings | Capital Engineering vs. BJC Heavy Industries | Capital Engineering vs. Chukai Public |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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