Correlation Between Steel Authority and Bata India
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By analyzing existing cross correlation between Steel Authority of and Bata India Limited, you can compare the effects of market volatilities on Steel Authority and Bata India 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 Steel Authority with a short position of Bata India. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Authority and Bata India.
Diversification Opportunities for Steel Authority and Bata India
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Steel and Bata is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Steel Authority of and Bata India Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bata India Limited and Steel Authority 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 Steel Authority of are associated (or correlated) with Bata India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bata India Limited has no effect on the direction of Steel Authority i.e., Steel Authority and Bata India go up and down completely randomly.
Pair Corralation between Steel Authority and Bata India
Assuming the 90 days trading horizon Steel Authority of is expected to generate 1.84 times more return on investment than Bata India. However, Steel Authority is 1.84 times more volatile than Bata India Limited. It trades about 0.02 of its potential returns per unit of risk. Bata India Limited is currently generating about 0.0 per unit of risk. If you would invest 11,603 in Steel Authority of on August 31, 2024 and sell it today you would earn a total of 25.00 from holding Steel Authority of or generate 0.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Steel Authority of vs. Bata India Limited
Performance |
| Timeline |
| Steel Authority |
| Bata India Limited |
Steel Authority and Bata India Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Authority and Bata India
The main advantage of trading using opposite Steel Authority and Bata India positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Authority position performs unexpectedly, Bata India 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 Bata India will offset losses from the drop in Bata India's long position.| Steel Authority vs. Praxis Home Retail | Steel Authority vs. Osia Hyper Retail | Steel Authority vs. Patanjali Foods Limited | Steel Authority vs. Sapphire Foods India |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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