Correlation Between International Steels and Loads
Can any of the company-specific risk be diversified away by investing in both International Steels and Loads 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 International Steels and Loads into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Steels and Loads, you can compare the effects of market volatilities on International Steels and Loads 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 International Steels with a short position of Loads. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Steels and Loads.
Diversification Opportunities for International Steels and Loads
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between International and Loads is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding International Steels and Loads in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loads and International Steels 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 International Steels are associated (or correlated) with Loads. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loads has no effect on the direction of International Steels i.e., International Steels and Loads go up and down completely randomly.
Pair Corralation between International Steels and Loads
Assuming the 90 days trading horizon International Steels is expected to generate 0.7 times more return on investment than Loads. However, International Steels is 1.42 times less risky than Loads. It trades about 0.07 of its potential returns per unit of risk. Loads is currently generating about 0.05 per unit of risk. If you would invest 3,728 in International Steels on September 3, 2024 and sell it today you would earn a total of 3,771 from holding International Steels or generate 101.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Steels vs. Loads
Performance |
| Timeline |
| International Steels |
| Loads |
International Steels and Loads Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Steels and Loads
The main advantage of trading using opposite International Steels and Loads positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Steels position performs unexpectedly, Loads 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 Loads will offset losses from the drop in Loads' long position.| International Steels vs. Aisha Steel Mills | International Steels vs. Mughal Iron Steel | International Steels vs. Engro Polymer Chemicals | International Steels vs. Sitara Chemical Industries |
| Loads vs. International Steels | Loads vs. ITTEFAQ Iron Industries | Loads vs. Adamjee Insurance | Loads vs. Data Agro |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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