Correlation Between Sitara Chemical and International Steels
Can any of the company-specific risk be diversified away by investing in both Sitara Chemical and International Steels 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 Sitara Chemical and International Steels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sitara Chemical Industries and International Steels, you can compare the effects of market volatilities on Sitara Chemical and International Steels 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 Sitara Chemical with a short position of International Steels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sitara Chemical and International Steels.
Diversification Opportunities for Sitara Chemical and International Steels
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sitara and International is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sitara Chemical Industries and International Steels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Steels and Sitara Chemical 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 Sitara Chemical Industries are associated (or correlated) with International Steels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Steels has no effect on the direction of Sitara Chemical i.e., Sitara Chemical and International Steels go up and down completely randomly.
Pair Corralation between Sitara Chemical and International Steels
Assuming the 90 days trading horizon Sitara Chemical is expected to generate 4.9 times less return on investment than International Steels. But when comparing it to its historical volatility, Sitara Chemical Industries is 1.12 times less risky than International Steels. It trades about 0.04 of its potential returns per unit of risk. International Steels is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 6,410 in International Steels on September 3, 2024 and sell it today you would earn a total of 1,089 from holding International Steels or generate 16.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sitara Chemical Industries vs. International Steels
Performance |
| Timeline |
| Sitara Chemical Indu |
| International Steels |
Sitara Chemical and International Steels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sitara Chemical and International Steels
The main advantage of trading using opposite Sitara Chemical and International Steels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sitara Chemical position performs unexpectedly, International Steels 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 International Steels will offset losses from the drop in International Steels' long position.| Sitara Chemical vs. Masood Textile Mills | Sitara Chemical vs. Fauji Foods | Sitara Chemical vs. KSB Pumps | Sitara Chemical vs. Mari Petroleum |
| International Steels vs. Aisha Steel Mills | International Steels vs. Mughal Iron Steel | International Steels vs. Engro Polymer Chemicals | International Steels vs. Sitara Chemical 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |