Correlation Between MSP Steel and Electrosteel Castings

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both MSP Steel and Electrosteel Castings 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 MSP Steel and Electrosteel Castings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MSP Steel Power and Electrosteel Castings Limited, you can compare the effects of market volatilities on MSP Steel and Electrosteel Castings 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 MSP Steel with a short position of Electrosteel Castings. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSP Steel and Electrosteel Castings.

Diversification Opportunities for MSP Steel and Electrosteel Castings

0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between MSP and Electrosteel is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding MSP Steel Power and Electrosteel Castings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrosteel Castings and MSP 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 MSP Steel Power are associated (or correlated) with Electrosteel Castings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrosteel Castings has no effect on the direction of MSP Steel i.e., MSP Steel and Electrosteel Castings go up and down completely randomly.

Pair Corralation between MSP Steel and Electrosteel Castings

Assuming the 90 days trading horizon MSP Steel Power is expected to generate 1.15 times more return on investment than Electrosteel Castings. However, MSP Steel is 1.15 times more volatile than Electrosteel Castings Limited. It trades about 0.04 of its potential returns per unit of risk. Electrosteel Castings Limited is currently generating about -0.23 per unit of risk. If you would invest  4,187  in MSP Steel Power on August 28, 2024 and sell it today you would earn a total of  66.00  from holding MSP Steel Power or generate 1.58% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

MSP Steel Power  vs.  Electrosteel Castings Limited

 Performance 
       Timeline  
MSP Steel Power 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in MSP Steel Power are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, MSP Steel is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
Electrosteel Castings 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Electrosteel Castings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

MSP Steel and Electrosteel Castings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MSP Steel and Electrosteel Castings

The main advantage of trading using opposite MSP Steel and Electrosteel Castings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSP Steel position performs unexpectedly, Electrosteel Castings 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 Electrosteel Castings will offset losses from the drop in Electrosteel Castings' long position.
MSP Steel vs. HDFC Life Insurance
MSP Steel vs. Yatra Online Limited
MSP Steel vs. Hindware Home Innovation
MSP Steel vs. Shemaroo Entertainment Limited
The idea behind MSP Steel Power and Electrosteel Castings 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.
Electrosteel Castings vs. NMDC Limited
Electrosteel Castings vs. Steel Authority of
Electrosteel Castings vs. Embassy Office Parks
Electrosteel Castings vs. Gujarat Narmada Valley
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

Other Complementary Tools

Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
CEOs Directory
Screen CEOs from public companies around the world
Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas
Analyst Advice
Analyst recommendations and target price estimates broken down by several categories
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators


 
Macroaxis helps investors of all levels and skills to maximize the upside of all their holdings and minimize the risk associated with market volatility, economic swings, and company-specific events. View terms and conditions
 
Feedback Blog
Made with optimal in San Francisco
2024 Macroaxis LLC
COMMON DESTINATIONS
MAIN CATEGORIES
COMPANY