Correlation Between City Steel and RPCG Public
Can any of the company-specific risk be diversified away by investing in both City Steel and RPCG Public 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 RPCG Public 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 RPCG Public, you can compare the effects of market volatilities on City Steel and RPCG Public 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 RPCG Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Steel and RPCG Public.
Diversification Opportunities for City Steel and RPCG Public
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between City and RPCG is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding City Steel Public and RPCG Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RPCG Public 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 RPCG Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RPCG Public has no effect on the direction of City Steel i.e., City Steel and RPCG Public go up and down completely randomly.
Pair Corralation between City Steel and RPCG Public
Assuming the 90 days trading horizon City Steel Public is expected to generate 0.54 times more return on investment than RPCG Public. However, City Steel Public is 1.84 times less risky than RPCG Public. It trades about -0.16 of its potential returns per unit of risk. RPCG Public is currently generating about -0.24 per unit of risk. If you would invest 194.00 in City Steel Public on September 1, 2024 and sell it today you would lose (8.00) from holding City Steel Public or give up 4.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
City Steel Public vs. RPCG Public
Performance |
| Timeline |
| City Steel Public |
| RPCG Public |
City Steel and RPCG Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Steel and RPCG Public
The main advantage of trading using opposite City Steel and RPCG Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Steel position performs unexpectedly, RPCG Public 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 RPCG Public will offset losses from the drop in RPCG Public's long position.| City Steel vs. AAPICO Hitech Public | City Steel vs. AP Public | City Steel vs. Aikchol Hospital Public | City Steel vs. Bank of Ayudhya |
| RPCG Public vs. Sawang Export Public | RPCG Public vs. Quality Houses Hotel | RPCG Public vs. Grande Hospitality Real | RPCG Public vs. City Steel 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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