Correlation Between TMT Steel and Precious Shipping
Can any of the company-specific risk be diversified away by investing in both TMT Steel and Precious Shipping 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 Precious Shipping 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 Precious Shipping Public, you can compare the effects of market volatilities on TMT Steel and Precious Shipping 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 Precious Shipping. Check out your portfolio center. Please also check ongoing floating volatility patterns of TMT Steel and Precious Shipping.
Diversification Opportunities for TMT Steel and Precious Shipping
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between TMT and Precious is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding TMT Steel Public and Precious Shipping Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precious Shipping 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 Precious Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precious Shipping Public has no effect on the direction of TMT Steel i.e., TMT Steel and Precious Shipping go up and down completely randomly.
Pair Corralation between TMT Steel and Precious Shipping
Assuming the 90 days trading horizon TMT Steel Public is expected to under-perform the Precious Shipping. But the stock apears to be less risky and, when comparing its historical volatility, TMT Steel Public is 1.15 times less risky than Precious Shipping. The stock trades about -0.91 of its potential returns per unit of risk. The Precious Shipping Public is currently generating about -0.25 of returns per unit of risk over similar time horizon. If you would invest 820.00 in Precious Shipping Public on August 28, 2024 and sell it today you would lose (55.00) from holding Precious Shipping Public or give up 6.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
TMT Steel Public vs. Precious Shipping Public
Performance |
| Timeline |
| TMT Steel Public |
| Precious Shipping Public |
TMT Steel and Precious Shipping Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TMT Steel and Precious Shipping
The main advantage of trading using opposite TMT Steel and Precious Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TMT Steel position performs unexpectedly, Precious Shipping 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 Precious Shipping will offset losses from the drop in Precious Shipping's long position.| TMT Steel vs. MCS Steel Public | TMT Steel vs. Thai Vegetable Oil | TMT Steel vs. Pacific Pipe Public | TMT Steel vs. Tipco Foods Public |
| Precious Shipping vs. Thoresen Thai Agencies | Precious Shipping vs. Regional Container Lines | Precious Shipping vs. The Siam Cement | Precious Shipping vs. PTT Public |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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