Correlation Between SAL Steel and Prakash Steelage
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By analyzing existing cross correlation between SAL Steel Limited and Prakash Steelage Limited, you can compare the effects of market volatilities on SAL Steel and Prakash Steelage 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 Prakash Steelage. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAL Steel and Prakash Steelage.
Diversification Opportunities for SAL Steel and Prakash Steelage
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between SAL and Prakash is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding SAL Steel Limited and Prakash Steelage Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prakash Steelage 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 Prakash Steelage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prakash Steelage has no effect on the direction of SAL Steel i.e., SAL Steel and Prakash Steelage go up and down completely randomly.
Pair Corralation between SAL Steel and Prakash Steelage
Assuming the 90 days trading horizon SAL Steel Limited is expected to under-perform the Prakash Steelage. In addition to that, SAL Steel is 1.37 times more volatile than Prakash Steelage Limited. It trades about -0.02 of its total potential returns per unit of risk. Prakash Steelage Limited is currently generating about 0.02 per unit of volatility. If you would invest 806.00 in Prakash Steelage Limited on August 29, 2024 and sell it today you would earn a total of 4.00 from holding Prakash Steelage Limited or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SAL Steel Limited vs. Prakash Steelage Limited
Performance |
| Timeline |
| SAL Steel Limited |
| Prakash Steelage |
SAL Steel and Prakash Steelage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SAL Steel and Prakash Steelage
The main advantage of trading using opposite SAL Steel and Prakash Steelage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAL Steel position performs unexpectedly, Prakash Steelage 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 Prakash Steelage will offset losses from the drop in Prakash Steelage's long position.The idea behind SAL Steel Limited and Prakash Steelage 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.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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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