Correlation Between SAL Steel and Elgi Rubber
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By analyzing existing cross correlation between SAL Steel Limited and Elgi Rubber, you can compare the effects of market volatilities on SAL Steel and Elgi Rubber 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 SAL Steel with a short position of Elgi Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAL Steel and Elgi Rubber.
Diversification Opportunities for SAL Steel and Elgi Rubber
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between SAL and Elgi is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding SAL Steel Limited and Elgi Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elgi Rubber and SAL Steel 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 SAL Steel Limited are associated (or correlated) with Elgi Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elgi Rubber has no effect on the direction of SAL Steel i.e., SAL Steel and Elgi Rubber go up and down completely randomly.
Pair Corralation between SAL Steel and Elgi Rubber
Assuming the 90 days trading horizon SAL Steel is expected to generate 1.95 times less return on investment than Elgi Rubber. But when comparing it to its historical volatility, SAL Steel Limited is 1.1 times less risky than Elgi Rubber. It trades about 0.08 of its potential returns per unit of risk. Elgi Rubber is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 6,570 in Elgi Rubber on September 2, 2024 and sell it today you would earn a total of 4,677 from holding Elgi Rubber or generate 71.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SAL Steel Limited vs. Elgi Rubber
Performance |
| Timeline |
| SAL Steel Limited |
| Elgi Rubber |
SAL Steel and Elgi Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SAL Steel and Elgi Rubber
The main advantage of trading using opposite SAL Steel and Elgi Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAL Steel position performs unexpectedly, Elgi Rubber 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 Elgi Rubber will offset losses from the drop in Elgi Rubber's long position.| SAL Steel vs. One 97 Communications | SAL Steel vs. Tata Communications Limited | SAL Steel vs. Ratnamani Metals Tubes | SAL Steel vs. Indian Metals Ferro |
| Elgi Rubber vs. Kingfa Science Technology | Elgi Rubber vs. Rico Auto Industries | Elgi Rubber vs. GACM Technologies Limited | Elgi Rubber vs. COSMO FIRST LIMITED |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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