Correlation Between J Steel and Seah Steel

Can any of the company-specific risk be diversified away by investing in both J Steel and Seah Steel 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 Seah Steel 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 Seah Steel Corp, you can compare the effects of market volatilities on J Steel and Seah 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 J Steel with a short position of Seah Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of J Steel and Seah Steel.

Diversification Opportunities for J Steel and Seah Steel

-0.27

Correlation Coefficient

J Steel  Seah Steel

Very good diversification

The 3 months correlation between 023440 and Seah is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding J Steel Co and Seah Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seah Steel Corp 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 Seah Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seah Steel Corp has no effect on the direction of J Steel i.e., J Steel and Seah Steel go up and down completely randomly.

Pair Corralation between J Steel and Seah Steel

Assuming the 90 days trading horizon J Steel is expected to generate 94.61 times less return on investment than Seah Steel. In addition to that, J Steel is 1.41 times more volatile than Seah Steel Corp. It trades about 0.0 of its total potential returns per unit of risk. Seah Steel Corp is currently generating about 0.22 per unit of volatility. If you would invest  11,670,000  in Seah Steel Corp on December 1, 2024 and sell it today you would earn a total of  4,400,000  from holding Seah Steel Corp or generate 37.7% 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.  Seah Steel Corp

J Steel

Risk-Adjusted Performance

Very Weak

Over the last 90 days J Steel Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, J Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Seah Steel Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Seah Steel Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Seah Steel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with J Steel and Seah Steel

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

The idea behind J Steel Co and Seah Steel Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.