Correlation Between INSUN Environmental and Seah Steel

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

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

Diversification Opportunities for INSUN Environmental and Seah Steel

0.32

Correlation Coefficient

INSUN Environmental  Seah Steel

Weak diversification

The 3 months correlation between INSUN and Seah is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding INSUN Environmental New 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 INSUN Environmental 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 INSUN Environmental New 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 INSUN Environmental i.e., INSUN Environmental and Seah Steel go up and down completely randomly.

Pair Corralation between INSUN Environmental and Seah Steel

Assuming the 90 days trading horizon INSUN Environmental is expected to generate 7.07 times less return on investment than Seah Steel. In addition to that, INSUN Environmental is 1.17 times more volatile than Seah Steel Corp. It trades about 0.02 of its total potential returns per unit of risk. Seah Steel Corp is currently generating about 0.13 per unit of volatility. If you would invest  11,650,000  in Seah Steel Corp on October 26, 2024 and sell it today you would earn a total of  2,060,000  from holding Seah Steel Corp or generate 17.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

INSUN Environmental New  vs.  Seah Steel Corp

INSUN Environmental New

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in INSUN Environmental New are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, INSUN Environmental 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

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Seah Steel Corp are ranked lower than 10 (%) 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 INSUN Environmental and Seah Steel

The main advantage of trading using opposite INSUN Environmental and Seah Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INSUN Environmental 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 INSUN Environmental New 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.