Correlation Between Champion Iron and Bisalloy Steel

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

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

Diversification Opportunities for Champion Iron and Bisalloy Steel

-0.45

Correlation Coefficient

Champion Iron  Bisalloy Steel

Very good diversification

The 3 months correlation between Champion and Bisalloy is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron and Bisalloy Steel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bisalloy Steel Group and Champion Iron 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 Champion Iron are associated (or correlated) with Bisalloy Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bisalloy Steel Group has no effect on the direction of Champion Iron i.e., Champion Iron and Bisalloy Steel go up and down completely randomly.

Pair Corralation between Champion Iron and Bisalloy Steel

Assuming the 90 days trading horizon Champion Iron is expected to under-perform the Bisalloy Steel. But the stock apears to be less risky and, when comparing its historical volatility, Champion Iron is 1.3 times less risky than Bisalloy Steel. The stock trades about -0.01 of its potential returns per unit of risk. The Bisalloy Steel Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  183.00  in Bisalloy Steel Group on October 4, 2024 and sell it today you would earn a total of  259.00  from holding Bisalloy Steel Group or generate 141.53% return on investment over 90 days.

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

Champion Iron  vs.  Bisalloy Steel Group

Champion Iron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Champion 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 basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Bisalloy Steel Group

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with Champion Iron and Bisalloy Steel

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

The idea behind Champion Iron and Bisalloy Steel Group 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.