Correlation Between Manaksia Steels and SAL Steel
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By analyzing existing cross correlation between Manaksia Steels Limited and SAL Steel Limited, you can compare the effects of market volatilities on Manaksia Steels and SAL 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 Manaksia Steels with a short position of SAL Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manaksia Steels and SAL Steel.
Diversification Opportunities for Manaksia Steels and SAL Steel
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Manaksia and SAL is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Manaksia Steels Limited and SAL Steel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAL Steel Limited and Manaksia 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 Manaksia Steels Limited are associated (or correlated) with SAL Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAL Steel Limited has no effect on the direction of Manaksia Steels i.e., Manaksia Steels and SAL Steel go up and down completely randomly.
Pair Corralation between Manaksia Steels and SAL Steel
Assuming the 90 days trading horizon Manaksia Steels Limited is expected to generate 1.07 times more return on investment than SAL Steel. However, Manaksia Steels is 1.07 times more volatile than SAL Steel Limited. It trades about 0.05 of its potential returns per unit of risk. SAL Steel Limited is currently generating about 0.04 per unit of risk. If you would invest 3,980 in Manaksia Steels Limited on August 30, 2024 and sell it today you would earn a total of 2,229 from holding Manaksia Steels Limited or generate 56.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Manaksia Steels Limited vs. SAL Steel Limited
Performance |
| Timeline |
| Manaksia Steels |
| SAL Steel Limited |
Manaksia Steels and SAL Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manaksia Steels and SAL Steel
The main advantage of trading using opposite Manaksia Steels and SAL Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manaksia Steels position performs unexpectedly, SAL 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 SAL Steel will offset losses from the drop in SAL Steel's long position.The idea behind Manaksia Steels Limited and SAL Steel Limited 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.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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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