Correlation Between Bisalloy Steel and Red Hill

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

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

Diversification Opportunities for Bisalloy Steel and Red Hill

0.79

Correlation Coefficient

Bisalloy Steel  Red Hill

Poor diversification

The 3 months correlation between Bisalloy and Red is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bisalloy Steel Group and Red Hill Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Hill Iron and Bisalloy 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 Bisalloy Steel Group are associated (or correlated) with Red Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Hill Iron has no effect on the direction of Bisalloy Steel i.e., Bisalloy Steel and Red Hill go up and down completely randomly.

Pair Corralation between Bisalloy Steel and Red Hill

Assuming the 90 days trading horizon Bisalloy Steel Group is expected to under-perform the Red Hill. In addition to that, Bisalloy Steel is 1.74 times more volatile than Red Hill Iron. It trades about -0.13 of its total potential returns per unit of risk. Red Hill Iron is currently generating about -0.21 per unit of volatility. If you would invest  411.00  in Red Hill Iron on December 29, 2024 and sell it today you would lose (87.00) from holding Red Hill Iron or give up 21.17% of portfolio value over 90 days.

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

Bisalloy Steel Group  vs.  Red Hill Iron

Bisalloy Steel Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bisalloy Steel Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Red Hill Iron

Risk-Adjusted Performance

Very Weak

Over the last 90 days Red Hill Iron has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Bisalloy Steel and Red Hill

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

The idea behind Bisalloy Steel Group and Red Hill Iron 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.