Correlation Between SAF Special and NSL Foods
Can any of the company-specific risk be diversified away by investing in both SAF Special and NSL 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 SAF Special and NSL Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAF Special Steel and NSL Foods Public, you can compare the effects of market volatilities on SAF Special and NSL 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 SAF Special with a short position of NSL Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAF Special and NSL Foods.
Diversification Opportunities for SAF Special and NSL Foods
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SAF and NSL is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding SAF Special Steel and NSL Foods Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSL Foods Public and SAF Special 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 SAF Special Steel are associated (or correlated) with NSL Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSL Foods Public has no effect on the direction of SAF Special i.e., SAF Special and NSL Foods go up and down completely randomly.
Pair Corralation between SAF Special and NSL Foods
Assuming the 90 days trading horizon SAF Special Steel is expected to generate 3.33 times more return on investment than NSL Foods. However, SAF Special is 3.33 times more volatile than NSL Foods Public. It trades about 0.01 of its potential returns per unit of risk. NSL Foods Public is currently generating about -0.22 per unit of risk. If you would invest 54.00 in SAF Special Steel on September 13, 2024 and sell it today you would lose (1.00) from holding SAF Special Steel or give up 1.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SAF Special Steel vs. NSL Foods Public
Performance |
| Timeline |
| SAF Special Steel |
| NSL Foods Public |
SAF Special and NSL Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SAF Special and NSL Foods
The main advantage of trading using opposite SAF Special and NSL Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAF Special position performs unexpectedly, NSL 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 NSL Foods will offset losses from the drop in NSL Foods' long position.| SAF Special vs. Tata Steel Public | SAF Special vs. G J Steel | SAF Special vs. POSCO Thainox Public | SAF Special vs. TMT Steel Public |
| NSL Foods vs. DOHOME | NSL Foods vs. Home Product Center | NSL Foods vs. Thai Steel Cable | NSL Foods vs. SAF Special 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 Channel module to use Commodity Channel Index to analyze current equity momentum.
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