Correlation Between Eastern Technical and TMT Steel
Can any of the company-specific risk be diversified away by investing in both Eastern Technical and TMT Steel 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 Eastern Technical and TMT Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Technical Engineering and TMT Steel Public, you can compare the effects of market volatilities on Eastern Technical and TMT Steel 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 Eastern Technical with a short position of TMT Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Technical and TMT Steel.
Diversification Opportunities for Eastern Technical and TMT Steel
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Eastern and TMT is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Technical Engineering and TMT Steel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMT Steel Public and Eastern Technical 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 Eastern Technical Engineering are associated (or correlated) with TMT Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMT Steel Public has no effect on the direction of Eastern Technical i.e., Eastern Technical and TMT Steel go up and down completely randomly.
Pair Corralation between Eastern Technical and TMT Steel
Assuming the 90 days trading horizon Eastern Technical Engineering is expected to generate 1.62 times more return on investment than TMT Steel. However, Eastern Technical is 1.62 times more volatile than TMT Steel Public. It trades about -0.33 of its potential returns per unit of risk. TMT Steel Public is currently generating about -1.0 per unit of risk. If you would invest 105.00 in Eastern Technical Engineering on August 24, 2024 and sell it today you would lose (13.00) from holding Eastern Technical Engineering or give up 12.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Eastern Technical Engineering vs. TMT Steel Public
Performance |
| Timeline |
| Eastern Technical |
| TMT Steel Public |
Eastern Technical and TMT Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Technical and TMT Steel
The main advantage of trading using opposite Eastern Technical and TMT Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Technical position performs unexpectedly, TMT Steel 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 TMT Steel will offset losses from the drop in TMT Steel's long position.| Eastern Technical vs. G Capital Public | Eastern Technical vs. Harn Engineering Solutions | Eastern Technical vs. Fortune Parts Industry | Eastern Technical vs. Hydrotek Public |
| TMT Steel vs. PTT Public | TMT Steel vs. PTT Exploration and | TMT Steel vs. The Siam Cement | TMT Steel vs. CP ALL 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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