Correlation Between SAL Steel and Future Retail

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

Diversification Opportunities for SAL Steel and Future Retail

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between SAL and Future is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SAL Steel Limited and Future Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Future Retail Limited 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 Future Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Future Retail Limited has no effect on the direction of SAL Steel i.e., SAL Steel and Future Retail go up and down completely randomly.

Pair Corralation between SAL Steel and Future Retail

If you would invest  228.00  in Future Retail Limited on August 30, 2024 and sell it today you would earn a total of  0.00  from holding Future Retail Limited or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

SAL Steel Limited  vs.  Future Retail Limited

 Performance 
       Timeline  
SAL Steel Limited 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in SAL Steel Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, SAL Steel may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Future Retail Limited 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Future Retail Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Future Retail is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

SAL Steel and Future Retail Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SAL Steel and Future Retail

The main advantage of trading using opposite SAL Steel and Future Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAL Steel position performs unexpectedly, Future Retail 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 Future Retail will offset losses from the drop in Future Retail's long position.
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The idea behind SAL Steel Limited and Future Retail 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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