Correlation Between City Steel and Star Petroleum
Can any of the company-specific risk be diversified away by investing in both City Steel and Star Petroleum 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 Star Petroleum 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 Star Petroleum Refining, you can compare the effects of market volatilities on City Steel and Star Petroleum 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 Star Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Steel and Star Petroleum.
Diversification Opportunities for City Steel and Star Petroleum
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between City and Star is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding City Steel Public and Star Petroleum Refining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Petroleum Refining 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 Star Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Petroleum Refining has no effect on the direction of City Steel i.e., City Steel and Star Petroleum go up and down completely randomly.
Pair Corralation between City Steel and Star Petroleum
Assuming the 90 days trading horizon City Steel Public is expected to under-perform the Star Petroleum. In addition to that, City Steel is 1.08 times more volatile than Star Petroleum Refining. It trades about -0.05 of its total potential returns per unit of risk. Star Petroleum Refining is currently generating about 0.03 per unit of volatility. If you would invest 550.00 in Star Petroleum Refining on November 29, 2024 and sell it today you would earn a total of 5.00 from holding Star Petroleum Refining or generate 0.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
City Steel Public vs. Star Petroleum Refining
Performance |
| Timeline |
| City Steel Public |
| Star Petroleum Refining |
City Steel and Star Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Steel and Star Petroleum
The main advantage of trading using opposite City Steel and Star Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Steel position performs unexpectedly, Star Petroleum 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 Star Petroleum will offset losses from the drop in Star Petroleum'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 |
| Star Petroleum vs. Thai Oil Public | Star Petroleum vs. IRPC Public | Star Petroleum vs. PTT Global Chemical | Star Petroleum vs. PTT Exploration and |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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