Correlation Between Zenith Steel and SAL Steel
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By analyzing existing cross correlation between Zenith Steel Pipes and SAL Steel Limited, you can compare the effects of market volatilities on Zenith Steel 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 Zenith Steel with a short position of SAL Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zenith Steel and SAL Steel.
Diversification Opportunities for Zenith Steel and SAL Steel
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Zenith and SAL is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Zenith Steel Pipes 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 Zenith 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 Zenith Steel Pipes 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 Zenith Steel i.e., Zenith Steel and SAL Steel go up and down completely randomly.
Pair Corralation between Zenith Steel and SAL Steel
Assuming the 90 days trading horizon Zenith Steel Pipes is expected to generate 1.03 times more return on investment than SAL Steel. However, Zenith Steel is 1.03 times more volatile than SAL Steel Limited. It trades about 0.04 of its potential returns per unit of risk. SAL Steel Limited is currently generating about 0.03 per unit of risk. If you would invest 445.00 in Zenith Steel Pipes on November 1, 2024 and sell it today you would earn a total of 249.00 from holding Zenith Steel Pipes or generate 55.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zenith Steel Pipes vs. SAL Steel Limited
Performance |
| Timeline |
| Zenith Steel Pipes |
| SAL Steel Limited |
Zenith Steel and SAL Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zenith Steel and SAL Steel
The main advantage of trading using opposite Zenith Steel and SAL Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zenith Steel 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.| Zenith Steel vs. Southern Petrochemicals Industries | Zenith Steel vs. Dharani SugarsChemicals Limited | Zenith Steel vs. Ortel Communications Limited | Zenith Steel vs. JGCHEMICALS LIMITED |
| SAL Steel vs. KNR Constructions Limited | SAL Steel vs. Oriental Hotels Limited | SAL Steel vs. Juniper Hotels | SAL Steel vs. Rajnandini Metal Limited |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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