Correlation Between PT Steel and USWE SPORTS
Can any of the company-specific risk be diversified away by investing in both PT Steel and USWE SPORTS 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 PT Steel and USWE SPORTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Steel Pipe and USWE SPORTS AB, you can compare the effects of market volatilities on PT Steel and USWE SPORTS 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 PT Steel with a short position of USWE SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Steel and USWE SPORTS.
Diversification Opportunities for PT Steel and USWE SPORTS
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between S08 and USWE is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding PT Steel Pipe and USWE SPORTS AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USWE SPORTS AB and PT 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 PT Steel Pipe are associated (or correlated) with USWE SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USWE SPORTS AB has no effect on the direction of PT Steel i.e., PT Steel and USWE SPORTS go up and down completely randomly.
Pair Corralation between PT Steel and USWE SPORTS
Assuming the 90 days horizon PT Steel Pipe is expected to generate 1.62 times more return on investment than USWE SPORTS. However, PT Steel is 1.62 times more volatile than USWE SPORTS AB. It trades about 0.03 of its potential returns per unit of risk. USWE SPORTS AB is currently generating about -0.02 per unit of risk. If you would invest 1.25 in PT Steel Pipe on October 12, 2024 and sell it today you would lose (0.10) from holding PT Steel Pipe or give up 8.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Steel Pipe vs. USWE SPORTS AB
Performance |
| Timeline |
| PT Steel Pipe |
| USWE SPORTS AB |
PT Steel and USWE SPORTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Steel and USWE SPORTS
The main advantage of trading using opposite PT Steel and USWE SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Steel position performs unexpectedly, USWE SPORTS 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 USWE SPORTS will offset losses from the drop in USWE SPORTS's long position.| PT Steel vs. MARKET VECTR RETAIL | PT Steel vs. FLOW TRADERS LTD | PT Steel vs. Zoom Video Communications | PT Steel vs. Charter Communications |
| USWE SPORTS vs. Take Two Interactive Software | USWE SPORTS vs. ZURICH INSURANCE GROUP | USWE SPORTS vs. Japan Post Insurance | USWE SPORTS vs. UPDATE SOFTWARE |
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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