Correlation Between Aisha Steel and ITTEFAQ Iron

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

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

Diversification Opportunities for Aisha Steel and ITTEFAQ Iron

0.64

Correlation Coefficient

Aisha Steel  ITTEFAQ Iron

Poor diversification

The 3 months correlation between Aisha and ITTEFAQ is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Aisha Steel Mills and ITTEFAQ Iron Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITTEFAQ Iron Industries and Aisha 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 Aisha Steel Mills are associated (or correlated) with ITTEFAQ Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITTEFAQ Iron Industries has no effect on the direction of Aisha Steel i.e., Aisha Steel and ITTEFAQ Iron go up and down completely randomly.

Pair Corralation between Aisha Steel and ITTEFAQ Iron

Assuming the 90 days trading horizon Aisha Steel Mills is expected to under-perform the ITTEFAQ Iron. But the stock apears to be less risky and, when comparing its historical volatility, Aisha Steel Mills is 1.51 times less risky than ITTEFAQ Iron. The stock trades about -0.05 of its potential returns per unit of risk. The ITTEFAQ Iron Industries is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  697.00  in ITTEFAQ Iron Industries on December 25, 2024 and sell it today you would earn a total of  33.00  from holding ITTEFAQ Iron Industries or generate 4.73% return on investment over 90 days.

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

Aisha Steel Mills  vs.  ITTEFAQ Iron Industries

Aisha Steel Mills

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aisha Steel Mills has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

ITTEFAQ Iron Industries

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ITTEFAQ Iron Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting technical and fundamental indicators, ITTEFAQ Iron may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Aisha Steel and ITTEFAQ Iron

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

The idea behind Aisha Steel Mills and ITTEFAQ Iron 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.