Correlation Between CiT and Steer Technologies

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

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

Diversification Opportunities for CiT and Steer Technologies

0.07

Correlation Coefficient

CiT  Steer Technologies

Significant diversification

The 3 months correlation between CiT and Steer is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding CiT Inc and Steer Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steer Technologies and CiT 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 CiT Inc are associated (or correlated) with Steer Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steer Technologies has no effect on the direction of CiT i.e., CiT and Steer Technologies go up and down completely randomly.

Pair Corralation between CiT and Steer Technologies

Given the investment horizon of 90 days CiT is expected to generate 1.19 times less return on investment than Steer Technologies. In addition to that, CiT is 2.62 times more volatile than Steer Technologies. It trades about 0.02 of its total potential returns per unit of risk. Steer Technologies is currently generating about 0.08 per unit of volatility. If you would invest  1,620  in Steer Technologies on September 3, 2024 and sell it today you would earn a total of  54.00  from holding Steer Technologies or generate 3.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	67.19%
Values	Daily Returns

CiT Inc  vs.  Steer Technologies

CiT Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CiT Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CiT is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Steer Technologies

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Steer Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Steer Technologies is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with CiT and Steer Technologies

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

The idea behind CiT Inc and Steer Technologies 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.