Correlation Between TMT Steel and Dynasty Ceramic
Can any of the company-specific risk be diversified away by investing in both TMT Steel and Dynasty Ceramic 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 TMT Steel and Dynasty Ceramic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TMT Steel Public and Dynasty Ceramic Public, you can compare the effects of market volatilities on TMT Steel and Dynasty Ceramic 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 TMT Steel with a short position of Dynasty Ceramic. Check out your portfolio center. Please also check ongoing floating volatility patterns of TMT Steel and Dynasty Ceramic.
Diversification Opportunities for TMT Steel and Dynasty Ceramic
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between TMT and Dynasty is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding TMT Steel Public and Dynasty Ceramic Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynasty Ceramic Public and TMT Steel 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 TMT Steel Public are associated (or correlated) with Dynasty Ceramic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynasty Ceramic Public has no effect on the direction of TMT Steel i.e., TMT Steel and Dynasty Ceramic go up and down completely randomly.
Pair Corralation between TMT Steel and Dynasty Ceramic
Assuming the 90 days trading horizon TMT Steel Public is expected to generate 28.11 times more return on investment than Dynasty Ceramic. However, TMT Steel is 28.11 times more volatile than Dynasty Ceramic Public. It trades about 0.04 of its potential returns per unit of risk. Dynasty Ceramic Public is currently generating about -0.03 per unit of risk. If you would invest 646.00 in TMT Steel Public on August 25, 2024 and sell it today you would lose (304.00) from holding TMT Steel Public or give up 47.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
TMT Steel Public vs. Dynasty Ceramic Public
Performance |
| Timeline |
| TMT Steel Public |
| Dynasty Ceramic Public |
TMT Steel and Dynasty Ceramic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TMT Steel and Dynasty Ceramic
The main advantage of trading using opposite TMT Steel and Dynasty Ceramic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TMT Steel position performs unexpectedly, Dynasty Ceramic 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 Dynasty Ceramic will offset losses from the drop in Dynasty Ceramic's long position.| TMT Steel vs. PTT Public | TMT Steel vs. PTT Exploration and | TMT Steel vs. The Siam Cement | TMT Steel vs. CP ALL Public |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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