Correlation Between Future Retail and STEEL EXCHANGE

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Can any of the company-specific risk be diversified away by investing in both Future Retail and STEEL EXCHANGE 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 Future Retail and STEEL EXCHANGE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Future Retail Limited and STEEL EXCHANGE INDIA, you can compare the effects of market volatilities on Future Retail and STEEL EXCHANGE 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 Future Retail with a short position of STEEL EXCHANGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Future Retail and STEEL EXCHANGE.

Diversification Opportunities for Future Retail and STEEL EXCHANGE

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Future and STEEL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Future Retail Limited and STEEL EXCHANGE INDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STEEL EXCHANGE INDIA and Future Retail 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 Future Retail Limited are associated (or correlated) with STEEL EXCHANGE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STEEL EXCHANGE INDIA has no effect on the direction of Future Retail i.e., Future Retail and STEEL EXCHANGE go up and down completely randomly.

Pair Corralation between Future Retail and STEEL EXCHANGE

If you would invest  1,086  in STEEL EXCHANGE INDIA on September 12, 2024 and sell it today you would earn a total of  34.00  from holding STEEL EXCHANGE INDIA or generate 3.13% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Future Retail Limited  vs.  STEEL EXCHANGE INDIA

 Performance 
       Timeline  
Future Retail Limited 

Risk-Adjusted Performance

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Over the last 90 days Future Retail Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Future Retail is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.
STEEL EXCHANGE INDIA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days STEEL EXCHANGE INDIA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Future Retail and STEEL EXCHANGE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Future Retail and STEEL EXCHANGE

The main advantage of trading using opposite Future Retail and STEEL EXCHANGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Future Retail position performs unexpectedly, STEEL EXCHANGE 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 EXCHANGE will offset losses from the drop in STEEL EXCHANGE's long position.
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The idea behind Future Retail Limited and STEEL EXCHANGE INDIA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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