Correlation Between CP ALL and Permsin Steel

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

By analyzing existing cross correlation between CP ALL Public and Permsin Steel Works, you can compare the effects of market volatilities on CP ALL and Permsin 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 CP ALL with a short position of Permsin Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of CP ALL and Permsin Steel.

Diversification Opportunities for CP ALL and Permsin Steel

0.35

Correlation Coefficient

CP ALL  Permsin Steel

Weak diversification

The 3 months correlation between CPALL and Permsin is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding CP ALL Public and Permsin Steel Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Permsin Steel Works and CP ALL 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 CP ALL Public are associated (or correlated) with Permsin Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Permsin Steel Works has no effect on the direction of CP ALL i.e., CP ALL and Permsin Steel go up and down completely randomly.

Pair Corralation between CP ALL and Permsin Steel

Assuming the 90 days trading horizon CP ALL Public is expected to under-perform the Permsin Steel. But the stock apears to be less risky and, when comparing its historical volatility, CP ALL Public is 1.63 times less risky than Permsin Steel. The stock trades about -0.06 of its potential returns per unit of risk. The Permsin Steel Works is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  36.00  in Permsin Steel Works on December 30, 2024 and sell it today you would earn a total of  0.00  from holding Permsin Steel Works or generate 0.0% return on investment over 90 days.

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

CP ALL Public  vs.  Permsin Steel Works

CP ALL Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days CP ALL Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Permsin Steel Works

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Permsin Steel Works are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Permsin Steel is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with CP ALL and Permsin Steel

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

The idea behind CP ALL Public and Permsin Steel Works 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.