Correlation Between Steel Partners and Global Tech
Can any of the company-specific risk be diversified away by investing in both Steel Partners and Global Tech 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 Steel Partners and Global Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Partners Holdings and Global Tech Industries, you can compare the effects of market volatilities on Steel Partners and Global Tech 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 Steel Partners with a short position of Global Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Partners and Global Tech.
Diversification Opportunities for Steel Partners and Global Tech
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Steel and Global is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Steel Partners Holdings and Global Tech Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Tech Industries and Steel Partners 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 Steel Partners Holdings are associated (or correlated) with Global Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Tech Industries has no effect on the direction of Steel Partners i.e., Steel Partners and Global Tech go up and down completely randomly.
Pair Corralation between Steel Partners and Global Tech
Given the investment horizon of 90 days Steel Partners is expected to generate 246.7 times less return on investment than Global Tech. But when comparing it to its historical volatility, Steel Partners Holdings is 30.96 times less risky than Global Tech. It trades about 0.01 of its potential returns per unit of risk. Global Tech Industries is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 140.00 in Global Tech Industries on September 1, 2024 and sell it today you would lose (136.99) from holding Global Tech Industries or give up 97.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.78% |
| Values | Daily Returns |
Steel Partners Holdings vs. Global Tech Industries
Performance |
| Timeline |
| Steel Partners Holdings |
| Global Tech Industries |
Steel Partners and Global Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Partners and Global Tech
The main advantage of trading using opposite Steel Partners and Global Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Partners position performs unexpectedly, Global Tech 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 Global Tech will offset losses from the drop in Global Tech's long position.| Steel Partners vs. Compass Diversified | Steel Partners vs. Compass Diversified | Steel Partners vs. Compass Diversified | Steel Partners vs. Tejon Ranch Co |
| Global Tech vs. Seychelle Environmtl | Global Tech vs. Energy and Water | Global Tech vs. One World Universe | Global Tech vs. Vow ASA |
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 Stocks Directory module to find actively traded stocks across global markets.
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