Correlation Between SAL Steel and Tata Steel
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By analyzing existing cross correlation between SAL Steel Limited and Tata Steel Limited, you can compare the effects of market volatilities on SAL Steel and Tata Steel 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 Tata Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAL Steel and Tata Steel.
Diversification Opportunities for SAL Steel and Tata Steel
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SAL and Tata is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding SAL Steel Limited and Tata Steel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tata Steel 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 Tata Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tata Steel Limited has no effect on the direction of SAL Steel i.e., SAL Steel and Tata Steel go up and down completely randomly.
Pair Corralation between SAL Steel and Tata Steel
Assuming the 90 days trading horizon SAL Steel Limited is expected to generate 1.93 times more return on investment than Tata Steel. However, SAL Steel is 1.93 times more volatile than Tata Steel Limited. It trades about 0.03 of its potential returns per unit of risk. Tata Steel Limited is currently generating about 0.03 per unit of risk. If you would invest 1,690 in SAL Steel Limited on October 25, 2024 and sell it today you would earn a total of 559.00 from holding SAL Steel Limited or generate 33.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
SAL Steel Limited vs. Tata Steel Limited
Performance |
| Timeline |
| SAL Steel Limited |
| Tata Steel Limited |
SAL Steel and Tata Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SAL Steel and Tata Steel
The main advantage of trading using opposite SAL Steel and Tata Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAL Steel position performs unexpectedly, Tata Steel 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 Tata Steel will offset losses from the drop in Tata Steel's long position.| SAL Steel vs. NMDC Limited | SAL Steel vs. Steel Authority of | SAL Steel vs. Embassy Office Parks | SAL Steel vs. Jai Balaji Industries |
| Tata Steel vs. NMDC Limited | Tata Steel vs. Steel Authority of | Tata Steel vs. Embassy Office Parks | Tata Steel vs. Jai Balaji 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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