Correlation Between International Steels and Unity Foods
Can any of the company-specific risk be diversified away by investing in both International Steels and Unity Foods 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 Unity Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Steels and Unity Foods, you can compare the effects of market volatilities on International Steels and Unity Foods 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 Unity Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Steels and Unity Foods.
Diversification Opportunities for International Steels and Unity Foods
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and Unity is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding International Steels and Unity Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unity Foods 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 Unity Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unity Foods has no effect on the direction of International Steels i.e., International Steels and Unity Foods go up and down completely randomly.
Pair Corralation between International Steels and Unity Foods
Assuming the 90 days trading horizon International Steels is expected to under-perform the Unity Foods. In addition to that, International Steels is 1.15 times more volatile than Unity Foods. It trades about -0.54 of its total potential returns per unit of risk. Unity Foods is currently generating about -0.31 per unit of volatility. If you would invest 3,482 in Unity Foods on November 8, 2024 and sell it today you would lose (346.00) from holding Unity Foods or give up 9.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Steels vs. Unity Foods
Performance |
| Timeline |
| International Steels |
| Unity Foods |
International Steels and Unity Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Steels and Unity Foods
The main advantage of trading using opposite International Steels and Unity Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Steels position performs unexpectedly, Unity Foods 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 Unity Foods will offset losses from the drop in Unity Foods' long position.| International Steels vs. Big Bird Foods | International Steels vs. Matco Foods | International Steels vs. Fauji Foods | International Steels vs. JS Bank |
| Unity Foods vs. Matco Foods | Unity Foods vs. AKD Hospitality | Unity Foods vs. Beco Steel | Unity Foods vs. Mughal Iron Steel |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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