Correlation Between J Steel and Cytogen

Can any of the company-specific risk be diversified away by investing in both J Steel and Cytogen 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 J Steel and Cytogen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between J Steel Co and Cytogen, you can compare the effects of market volatilities on J Steel and Cytogen 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 J Steel with a short position of Cytogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of J Steel and Cytogen.

Diversification Opportunities for J Steel and Cytogen

-0.12

Correlation Coefficient

J Steel  Cytogen

Good diversification

The 3 months correlation between 023440 and Cytogen is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding J Steel Co and Cytogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cytogen and J 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 J Steel Co are associated (or correlated) with Cytogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cytogen has no effect on the direction of J Steel i.e., J Steel and Cytogen go up and down completely randomly.

Pair Corralation between J Steel and Cytogen

Assuming the 90 days trading horizon J Steel Co is expected to generate 1.04 times more return on investment than Cytogen. However, J Steel is 1.04 times more volatile than Cytogen. It trades about 0.12 of its potential returns per unit of risk. Cytogen is currently generating about -0.14 per unit of risk. If you would invest  135,100  in J Steel Co on September 12, 2024 and sell it today you would earn a total of  42,700  from holding J Steel Co or generate 31.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

J Steel Co  vs.  Cytogen

J Steel

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in J Steel Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, J Steel sustained solid returns over the last few months and may actually be approaching a breakup point.

Cytogen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cytogen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with J Steel and Cytogen

The main advantage of trading using opposite J Steel and Cytogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J Steel position performs unexpectedly, Cytogen 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 Cytogen will offset losses from the drop in Cytogen's long position.

The idea behind J Steel Co and Cytogen pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.