Correlation Between Tata Steel and Sahamit Machinery
Can any of the company-specific risk be diversified away by investing in both Tata Steel and Sahamit Machinery 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 Tata Steel and Sahamit Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tata Steel Public and Sahamit Machinery Public, you can compare the effects of market volatilities on Tata Steel and Sahamit Machinery 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 Tata Steel with a short position of Sahamit Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tata Steel and Sahamit Machinery.
Diversification Opportunities for Tata Steel and Sahamit Machinery
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tata and Sahamit is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Tata Steel Public and Sahamit Machinery Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sahamit Machinery Public and Tata 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 Tata Steel Public are associated (or correlated) with Sahamit Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sahamit Machinery Public has no effect on the direction of Tata Steel i.e., Tata Steel and Sahamit Machinery go up and down completely randomly.
Pair Corralation between Tata Steel and Sahamit Machinery
Assuming the 90 days trading horizon Tata Steel is expected to generate 1.02 times less return on investment than Sahamit Machinery. In addition to that, Tata Steel is 1.0 times more volatile than Sahamit Machinery Public. It trades about 0.04 of its total potential returns per unit of risk. Sahamit Machinery Public is currently generating about 0.04 per unit of volatility. If you would invest 445.00 in Sahamit Machinery Public on August 26, 2024 and sell it today you would lose (35.00) from holding Sahamit Machinery Public or give up 7.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tata Steel Public vs. Sahamit Machinery Public
Performance |
| Timeline |
| Tata Steel Public |
| Sahamit Machinery Public |
Tata Steel and Sahamit Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tata Steel and Sahamit Machinery
The main advantage of trading using opposite Tata Steel and Sahamit Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tata Steel position performs unexpectedly, Sahamit Machinery 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 Sahamit Machinery will offset losses from the drop in Sahamit Machinery's long position.| Tata Steel vs. TMT Steel Public | Tata Steel vs. TPI Polene Public | Tata Steel vs. Thoresen Thai Agencies | Tata Steel vs. TRC Construction Public |
| Sahamit Machinery vs. Tata Steel Public | Sahamit Machinery vs. Thaifoods Group Public | Sahamit Machinery vs. TMT Steel Public | Sahamit Machinery vs. The Erawan Group |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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