Correlation Between Steelcast and SAL Steel
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By analyzing existing cross correlation between Steelcast Limited and SAL Steel Limited, you can compare the effects of market volatilities on Steelcast and SAL 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 Steelcast with a short position of SAL Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steelcast and SAL Steel.
Diversification Opportunities for Steelcast and SAL Steel
Poor diversification
The 3 months correlation between Steelcast and SAL is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Steelcast Limited and SAL Steel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAL Steel Limited and Steelcast 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 Steelcast Limited are associated (or correlated) with SAL Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAL Steel Limited has no effect on the direction of Steelcast i.e., Steelcast and SAL Steel go up and down completely randomly.
Pair Corralation between Steelcast and SAL Steel
Assuming the 90 days trading horizon Steelcast is expected to generate 1.16 times less return on investment than SAL Steel. But when comparing it to its historical volatility, Steelcast Limited is 1.36 times less risky than SAL Steel. It trades about 0.06 of its potential returns per unit of risk. SAL Steel Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,355 in SAL Steel Limited on August 26, 2024 and sell it today you would earn a total of 1,049 from holding SAL Steel Limited or generate 77.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Steelcast Limited vs. SAL Steel Limited
Performance |
| Timeline |
| Steelcast Limited |
| SAL Steel Limited |
Steelcast and SAL Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steelcast and SAL Steel
The main advantage of trading using opposite Steelcast and SAL Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steelcast position performs unexpectedly, SAL 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 SAL Steel will offset losses from the drop in SAL Steel's long position.| Steelcast vs. NMDC Limited | Steelcast vs. Steel Authority of | Steelcast vs. Embassy Office Parks | Steelcast vs. Gujarat Narmada Valley |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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