Correlation Between CSC Steel and Rubberex M

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

Diversification Opportunities for CSC Steel and Rubberex M

0.36

Correlation Coefficient

CSC Steel  Rubberex M

Weak diversification

The 3 months correlation between CSC and Rubberex is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding CSC Steel Holdings and Rubberex M in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubberex M 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 Rubberex M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubberex M has no effect on the direction of CSC Steel i.e., CSC Steel and Rubberex M go up and down completely randomly.

Pair Corralation between CSC Steel and Rubberex M

Assuming the 90 days trading horizon CSC Steel Holdings is expected to under-perform the Rubberex M. But the stock apears to be less risky and, when comparing its historical volatility, CSC Steel Holdings is 3.56 times less risky than Rubberex M. The stock trades about -0.09 of its potential returns per unit of risk. The Rubberex M is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  18.00  in Rubberex M on October 25, 2024 and sell it today you would earn a total of  0.00  from holding Rubberex M or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

CSC Steel Holdings  vs.  Rubberex M

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.

Rubberex M

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rubberex M are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Rubberex M is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with CSC Steel and Rubberex M

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

The idea behind CSC Steel Holdings and Rubberex M 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.