Correlation Between SPCG Public and Steel Public
Can any of the company-specific risk be diversified away by investing in both SPCG Public and Steel Public 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 SPCG Public and Steel Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPCG Public and The Steel Public, you can compare the effects of market volatilities on SPCG Public and Steel Public 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 SPCG Public with a short position of Steel Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPCG Public and Steel Public.
Diversification Opportunities for SPCG Public and Steel Public
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SPCG and Steel is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding SPCG Public and The Steel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Public and SPCG Public 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 SPCG Public are associated (or correlated) with Steel Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Public has no effect on the direction of SPCG Public i.e., SPCG Public and Steel Public go up and down completely randomly.
Pair Corralation between SPCG Public and Steel Public
Assuming the 90 days trading horizon SPCG Public is expected to under-perform the Steel Public. But the stock apears to be less risky and, when comparing its historical volatility, SPCG Public is 46.33 times less risky than Steel Public. The stock trades about -0.08 of its potential returns per unit of risk. The The Steel Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 120.00 in The Steel Public on September 1, 2024 and sell it today you would lose (44.00) from holding The Steel Public or give up 36.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.45% |
| Values | Daily Returns |
SPCG Public vs. The Steel Public
Performance |
| Timeline |
| SPCG Public |
| Steel Public |
SPCG Public and Steel Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPCG Public and Steel Public
The main advantage of trading using opposite SPCG Public and Steel Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPCG Public position performs unexpectedly, Steel Public 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 Steel Public will offset losses from the drop in Steel Public's long position.| SPCG Public vs. BCPG Public | SPCG Public vs. TPI Polene Power | SPCG Public vs. BTS Group Holdings | SPCG Public vs. Energy Absolute Public |
| Steel Public vs. TMT Steel Public | Steel Public vs. Tycoons Worldwide Group | Steel Public vs. Thai German Products Public | Steel Public vs. Siam Steel Service |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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