Correlation Between Stock Exchange and City Steel
Can any of the company-specific risk be diversified away by investing in both Stock Exchange and City Steel 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 Stock Exchange and City Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stock Exchange Of and City Steel Public, you can compare the effects of market volatilities on Stock Exchange and City 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 Stock Exchange with a short position of City Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stock Exchange and City Steel.
Diversification Opportunities for Stock Exchange and City Steel
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Stock and City is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Stock Exchange Of and City Steel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Steel Public and Stock Exchange 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 Stock Exchange Of are associated (or correlated) with City Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Steel Public has no effect on the direction of Stock Exchange i.e., Stock Exchange and City Steel go up and down completely randomly.
Pair Corralation between Stock Exchange and City Steel
Assuming the 90 days trading horizon Stock Exchange is expected to generate 138.33 times less return on investment than City Steel. But when comparing it to its historical volatility, Stock Exchange Of is 124.22 times less risky than City Steel. It trades about 0.07 of its potential returns per unit of risk. City Steel Public is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 216.00 in City Steel Public on August 29, 2024 and sell it today you would lose (27.00) from holding City Steel Public or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stock Exchange Of vs. City Steel Public
Performance |
| Timeline |
Stock Exchange and City Steel Volatility Contrast
Predicted Return Density |
| Returns |
Stock Exchange Of
Pair trading matchups for Stock Exchange
City Steel Public
Pair trading matchups for City Steel
Pair Trading with Stock Exchange and City Steel
The main advantage of trading using opposite Stock Exchange and City Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stock Exchange position performs unexpectedly, City 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 City Steel will offset losses from the drop in City Steel's long position.| Stock Exchange vs. Copperwired Public | Stock Exchange vs. DOHOME | Stock Exchange vs. Porn Prom Metal | Stock Exchange vs. 3BB INTERNET INFRASTRUCTURE |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |