Correlation Between Steel Authority and PCBL
Can any of the company-specific risk be diversified away by investing in both Steel Authority and PCBL 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 PCBL 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 PCBL LIMITED, you can compare the effects of market volatilities on Steel Authority and PCBL 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 PCBL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Authority and PCBL.
Diversification Opportunities for Steel Authority and PCBL
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Steel and PCBL is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Steel Authority of and PCBL LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCBL 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 PCBL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PCBL LIMITED has no effect on the direction of Steel Authority i.e., Steel Authority and PCBL go up and down completely randomly.
Pair Corralation between Steel Authority and PCBL
Assuming the 90 days trading horizon Steel Authority of is expected to generate 0.75 times more return on investment than PCBL. However, Steel Authority of is 1.34 times less risky than PCBL. It trades about 0.02 of its potential returns per unit of risk. PCBL LIMITED is currently generating about -0.01 per unit of risk. If you would invest 11,571 in Steel Authority of on August 30, 2024 and sell it today you would earn a total of 57.00 from holding Steel Authority of or generate 0.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steel Authority of vs. PCBL LIMITED
Performance |
| Timeline |
| Steel Authority |
| PCBL LIMITED |
Steel Authority and PCBL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Authority and PCBL
The main advantage of trading using opposite Steel Authority and PCBL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Authority position performs unexpectedly, PCBL 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 PCBL will offset losses from the drop in PCBL's long position.| Steel Authority vs. NMDC Limited | Steel Authority vs. Embassy Office Parks | Steel Authority vs. Gujarat Narmada Valley | Steel Authority vs. Gujarat Alkalies and |
| PCBL vs. Steel Authority of | PCBL vs. Embassy Office Parks | PCBL vs. Indian Metals Ferro | PCBL vs. JTL Industries |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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