Correlation Between Synalloy and Stelco Holdings

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

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

Diversification Opportunities for Synalloy and Stelco Holdings

0.48

Correlation Coefficient

Synalloy  Stelco Holdings

Very weak diversification

The 3 months correlation between Synalloy and Stelco is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Synalloy and Stelco Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stelco Holdings and Synalloy 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 Synalloy are associated (or correlated) with Stelco Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stelco Holdings has no effect on the direction of Synalloy i.e., Synalloy and Stelco Holdings go up and down completely randomly.

Pair Corralation between Synalloy and Stelco Holdings

If you would invest  1,088  in Synalloy on September 28, 2024 and sell it today you would earn a total of  48.00  from holding Synalloy or generate 4.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	5.0%
Values	Daily Returns

Synalloy  vs.  Stelco Holdings

Synalloy

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Synalloy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Synalloy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Stelco Holdings

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Stelco Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Stelco Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Synalloy and Stelco Holdings

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

The idea behind Synalloy and Stelco Holdings 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 Stocks Directory module to find actively traded stocks across global markets.