Correlation Between Steel Authority and UFLEX
Can any of the company-specific risk be diversified away by investing in both Steel Authority and UFLEX 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 UFLEX 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 UFLEX Limited, you can compare the effects of market volatilities on Steel Authority and UFLEX 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 UFLEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Authority and UFLEX.
Diversification Opportunities for Steel Authority and UFLEX
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Steel and UFLEX is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Steel Authority of and UFLEX Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UFLEX 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 UFLEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UFLEX Limited has no effect on the direction of Steel Authority i.e., Steel Authority and UFLEX go up and down completely randomly.
Pair Corralation between Steel Authority and UFLEX
Assuming the 90 days trading horizon Steel Authority of is expected to generate 0.85 times more return on investment than UFLEX. However, Steel Authority of is 1.18 times less risky than UFLEX. It trades about 0.0 of its potential returns per unit of risk. UFLEX Limited is currently generating about -0.15 per unit of risk. If you would invest 11,775 in Steel Authority of on September 2, 2024 and sell it today you would lose (64.00) from holding Steel Authority of or give up 0.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Steel Authority of vs. UFLEX Limited
Performance |
| Timeline |
| Steel Authority |
| UFLEX Limited |
Steel Authority and UFLEX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Authority and UFLEX
The main advantage of trading using opposite Steel Authority and UFLEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Authority position performs unexpectedly, UFLEX 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 UFLEX will offset losses from the drop in UFLEX's long position.| Steel Authority vs. HT Media Limited | Steel Authority vs. Shyam Telecom Limited | Steel Authority vs. Entertainment Network Limited | Steel Authority vs. Reliance Communications Limited |
| UFLEX vs. Bharatiya Global Infomedia | UFLEX vs. Varun Beverages Limited | UFLEX vs. Bodhi Tree Multimedia | UFLEX vs. Cyber Media Research |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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