Correlation Between CSC Steel and Resintech Bhd

Can any of the company-specific risk be diversified away by investing in both CSC Steel and Resintech Bhd 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 Resintech Bhd 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 Resintech Bhd, you can compare the effects of market volatilities on CSC Steel and Resintech Bhd 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 Resintech Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSC Steel and Resintech Bhd.

Diversification Opportunities for CSC Steel and Resintech Bhd

-0.32

Correlation Coefficient

CSC Steel  Resintech Bhd

Very good diversification

The 3 months correlation between CSC and Resintech is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding CSC Steel Holdings and Resintech Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resintech Bhd 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 Resintech Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resintech Bhd has no effect on the direction of CSC Steel i.e., CSC Steel and Resintech Bhd go up and down completely randomly.

Pair Corralation between CSC Steel and Resintech Bhd

Assuming the 90 days trading horizon CSC Steel Holdings is expected to under-perform the Resintech Bhd. But the stock apears to be less risky and, when comparing its historical volatility, CSC Steel Holdings is 2.02 times less risky than Resintech Bhd. The stock trades about -0.07 of its potential returns per unit of risk. The Resintech Bhd is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  59.00  in Resintech Bhd on September 5, 2024 and sell it today you would earn a total of  8.00  from holding Resintech Bhd or generate 13.56% return on investment over 90 days.

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

CSC Steel Holdings  vs.  Resintech Bhd

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.

Resintech Bhd

Risk-Adjusted Performance

9 of 100

Modest

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

Pair Trading with CSC Steel and Resintech Bhd

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

The idea behind CSC Steel Holdings and Resintech Bhd 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.