Correlation Between Capacite Infraprojects and SAL Steel

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

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

Diversification Opportunities for Capacite Infraprojects and SAL Steel

0.63

Correlation Coefficient

Capacite Infraprojects  SAL Steel

Poor diversification

The 3 months correlation between Capacite and SAL is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Capacite Infraprojects Limited and SAL Steel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAL Steel Limited and Capacite Infraprojects 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 Capacite Infraprojects Limited are associated (or correlated) with SAL Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAL Steel Limited has no effect on the direction of Capacite Infraprojects i.e., Capacite Infraprojects and SAL Steel go up and down completely randomly.

Pair Corralation between Capacite Infraprojects and SAL Steel

Assuming the 90 days trading horizon Capacite Infraprojects Limited is expected to under-perform the SAL Steel. But the stock apears to be less risky and, when comparing its historical volatility, Capacite Infraprojects Limited is 1.59 times less risky than SAL Steel. The stock trades about -0.11 of its potential returns per unit of risk. The SAL Steel Limited is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  2,266  in SAL Steel Limited on December 27, 2024 and sell it today you would lose (462.00) from holding SAL Steel Limited or give up 20.39% of portfolio value over 90 days.

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

Capacite Infraprojects Limited  vs.  SAL Steel Limited

Capacite Infraprojects

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capacite Infraprojects Limited 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.

SAL Steel Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days SAL Steel Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Capacite Infraprojects and SAL Steel

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

The idea behind Capacite Infraprojects Limited and SAL Steel Limited 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.