Correlation Between ESGL Holdings and Steel Connect
Can any of the company-specific risk be diversified away by investing in both ESGL Holdings and Steel Connect 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 ESGL Holdings and Steel Connect into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESGL Holdings Limited and Steel Connect, you can compare the effects of market volatilities on ESGL Holdings and Steel Connect 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 ESGL Holdings with a short position of Steel Connect. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESGL Holdings and Steel Connect.
Diversification Opportunities for ESGL Holdings and Steel Connect
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ESGL and Steel is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding ESGL Holdings Limited and Steel Connect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Connect and ESGL Holdings 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 ESGL Holdings Limited are associated (or correlated) with Steel Connect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Connect has no effect on the direction of ESGL Holdings i.e., ESGL Holdings and Steel Connect go up and down completely randomly.
Pair Corralation between ESGL Holdings and Steel Connect
Given the investment horizon of 90 days ESGL Holdings Limited is expected to under-perform the Steel Connect. In addition to that, ESGL Holdings is 2.76 times more volatile than Steel Connect. It trades about -0.02 of its total potential returns per unit of risk. Steel Connect is currently generating about 0.04 per unit of volatility. If you would invest 947.00 in Steel Connect on September 12, 2024 and sell it today you would earn a total of 280.00 from holding Steel Connect or generate 29.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESGL Holdings Limited vs. Steel Connect
Performance |
| Timeline |
| ESGL Holdings Limited |
| Steel Connect |
ESGL Holdings and Steel Connect Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESGL Holdings and Steel Connect
The main advantage of trading using opposite ESGL Holdings and Steel Connect positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESGL Holdings position performs unexpectedly, Steel Connect 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 Steel Connect will offset losses from the drop in Steel Connect's long position.| ESGL Holdings vs. Avalon Holdings | ESGL Holdings vs. Greenwave Technology Solutions | ESGL Holdings vs. LanzaTech Global | ESGL Holdings vs. Enviri |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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