Correlation Between CSC Steel and Kossan Rubber

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

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

Diversification Opportunities for CSC Steel and Kossan Rubber

-0.39

Correlation Coefficient

CSC Steel  Kossan Rubber

Very good diversification

The 3 months correlation between CSC and Kossan is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding CSC Steel Holdings and Kossan Rubber Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kossan Rubber Industries and CSC 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 CSC Steel Holdings are associated (or correlated) with Kossan Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kossan Rubber Industries has no effect on the direction of CSC Steel i.e., CSC Steel and Kossan Rubber go up and down completely randomly.

Pair Corralation between CSC Steel and Kossan Rubber

Assuming the 90 days trading horizon CSC Steel Holdings is expected to generate 0.33 times more return on investment than Kossan Rubber. However, CSC Steel Holdings is 3.06 times less risky than Kossan Rubber. It trades about -0.04 of its potential returns per unit of risk. Kossan Rubber Industries is currently generating about -0.1 per unit of risk. If you would invest  117.00  in CSC Steel Holdings on October 11, 2024 and sell it today you would lose (1.00) from holding CSC Steel Holdings or give up 0.85% of portfolio value over 90 days.

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

CSC Steel Holdings  vs.  Kossan Rubber Industries

CSC Steel Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSC Steel Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, CSC Steel is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Kossan Rubber Industries

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kossan Rubber Industries are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Kossan Rubber disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CSC Steel and Kossan Rubber

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

The idea behind CSC Steel Holdings and Kossan Rubber Industries 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 Commodity Directory module to find actively traded commodities issued by global exchanges.