Correlation Between Hilton Metal and MSP Steel

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

Diversification Opportunities for Hilton Metal and MSP Steel

0.11
  Correlation Coefficient

Average diversification

The 3 months correlation between Hilton and MSP is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Metal Forging and MSP Steel Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSP Steel Power and Hilton Metal 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 Hilton Metal Forging are associated (or correlated) with MSP Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSP Steel Power has no effect on the direction of Hilton Metal i.e., Hilton Metal and MSP Steel go up and down completely randomly.

Pair Corralation between Hilton Metal and MSP Steel

Assuming the 90 days trading horizon Hilton Metal is expected to generate 2.5 times less return on investment than MSP Steel. In addition to that, Hilton Metal is 1.08 times more volatile than MSP Steel Power. It trades about 0.05 of its total potential returns per unit of risk. MSP Steel Power is currently generating about 0.12 per unit of volatility. If you would invest  995.00  in MSP Steel Power on September 19, 2024 and sell it today you would earn a total of  3,711  from holding MSP Steel Power or generate 372.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Hilton Metal Forging  vs.  MSP Steel Power

 Performance 
       Timeline  
Hilton Metal Forging 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Hilton Metal Forging are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Hilton Metal sustained solid returns over the last few months and may actually be approaching a breakup point.
MSP Steel Power 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days MSP Steel Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Hilton Metal and MSP Steel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hilton Metal and MSP Steel

The main advantage of trading using opposite Hilton Metal and MSP Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Metal position performs unexpectedly, MSP 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 MSP Steel will offset losses from the drop in MSP Steel's long position.
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The idea behind Hilton Metal Forging and MSP Steel Power 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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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 Global Correlations module to find global opportunities by holding instruments from different markets.

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