Correlation Between Steel Authority and Bkm Industries

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Can any of the company-specific risk be diversified away by investing in both Steel Authority and Bkm Industries 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 Steel Authority and Bkm Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Authority of and Bkm Industries Limited, you can compare the effects of market volatilities on Steel Authority and Bkm Industries 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 Bkm Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Authority and Bkm Industries.

Diversification Opportunities for Steel Authority and Bkm Industries

-0.03
  Correlation Coefficient

Good diversification

The 3 months correlation between Steel and Bkm is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Steel Authority of and Bkm Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bkm Industries 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 Bkm Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bkm Industries has no effect on the direction of Steel Authority i.e., Steel Authority and Bkm Industries go up and down completely randomly.

Pair Corralation between Steel Authority and Bkm Industries

If you would invest  4,500  in Bkm Industries Limited on October 26, 2024 and sell it today you would earn a total of  0.00  from holding Bkm Industries Limited or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy97.67%
ValuesDaily Returns

Steel Authority of  vs.  Bkm Industries Limited

 Performance 
       Timeline  
Steel Authority 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Steel Authority of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Steel Authority is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
Bkm Industries 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Bkm Industries Limited are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Bkm Industries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Steel Authority and Bkm Industries Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Steel Authority and Bkm Industries

The main advantage of trading using opposite Steel Authority and Bkm Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Authority position performs unexpectedly, Bkm Industries 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 Bkm Industries will offset losses from the drop in Bkm Industries' long position.
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The idea behind Steel Authority of and Bkm Industries 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.
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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