Correlation Between Metropolitan Steel and Sitara Chemical
Can any of the company-specific risk be diversified away by investing in both Metropolitan Steel and Sitara Chemical 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 Metropolitan Steel and Sitara Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan Steel Corp and Sitara Chemical Industries, you can compare the effects of market volatilities on Metropolitan Steel and Sitara Chemical 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 Metropolitan Steel with a short position of Sitara Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan Steel and Sitara Chemical.
Diversification Opportunities for Metropolitan Steel and Sitara Chemical
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Metropolitan and Sitara is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan Steel Corp and Sitara Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sitara Chemical Indu and Metropolitan Steel 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 Metropolitan Steel Corp are associated (or correlated) with Sitara Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sitara Chemical Indu has no effect on the direction of Metropolitan Steel i.e., Metropolitan Steel and Sitara Chemical go up and down completely randomly.
Pair Corralation between Metropolitan Steel and Sitara Chemical
Assuming the 90 days trading horizon Metropolitan Steel Corp is expected to under-perform the Sitara Chemical. In addition to that, Metropolitan Steel is 1.79 times more volatile than Sitara Chemical Industries. It trades about -0.05 of its total potential returns per unit of risk. Sitara Chemical Industries is currently generating about 0.32 per unit of volatility. If you would invest 29,514 in Sitara Chemical Industries on October 25, 2024 and sell it today you would earn a total of 3,463 from holding Sitara Chemical Industries or generate 11.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Metropolitan Steel Corp vs. Sitara Chemical Industries
Performance |
| Timeline |
| Metropolitan Steel Corp |
| Sitara Chemical Indu |
Metropolitan Steel and Sitara Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan Steel and Sitara Chemical
The main advantage of trading using opposite Metropolitan Steel and Sitara Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan Steel position performs unexpectedly, Sitara Chemical 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 Sitara Chemical will offset losses from the drop in Sitara Chemical's long position.| Metropolitan Steel vs. Matco Foods | Metropolitan Steel vs. JS Investments | Metropolitan Steel vs. Crescent Steel Allied | Metropolitan Steel vs. Beco Steel |
| Sitara Chemical vs. Metropolitan Steel Corp | Sitara Chemical vs. Honda Atlas Cars | Sitara Chemical vs. Crescent Steel Allied | Sitara Chemical vs. Air Link Communication |
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 CEOs Directory module to screen CEOs from public companies around the world.
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