Correlation Between Leader Steel and Minetech Resources

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

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

Diversification Opportunities for Leader Steel and Minetech Resources

-0.08

Correlation Coefficient

Leader Steel  Minetech Resources

Good diversification

The 3 months correlation between Leader and Minetech is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Leader Steel Holdings and Minetech Resources Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minetech Resources Bhd and Leader 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 Leader Steel Holdings are associated (or correlated) with Minetech Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minetech Resources Bhd has no effect on the direction of Leader Steel i.e., Leader Steel and Minetech Resources go up and down completely randomly.

Pair Corralation between Leader Steel and Minetech Resources

Assuming the 90 days trading horizon Leader Steel Holdings is expected to under-perform the Minetech Resources. But the stock apears to be less risky and, when comparing its historical volatility, Leader Steel Holdings is 1.71 times less risky than Minetech Resources. The stock trades about -0.07 of its potential returns per unit of risk. The Minetech Resources Bhd is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Minetech Resources Bhd on September 13, 2024 and sell it today you would earn a total of  0.00  from holding Minetech Resources Bhd or generate 0.0% return on investment over 90 days.

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

Leader Steel Holdings  vs.  Minetech Resources Bhd

Leader Steel Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leader Steel Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Minetech Resources Bhd

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Minetech Resources Bhd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Minetech Resources 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 Leader Steel and Minetech Resources

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

The idea behind Leader Steel Holdings and Minetech Resources 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .