Correlation Between Skillful Craftsman and Insteel Industries

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

By analyzing existing cross correlation between Skillful Craftsman Education and Insteel Industries, you can compare the effects of market volatilities on Skillful Craftsman and Insteel Industries 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 Skillful Craftsman with a short position of Insteel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skillful Craftsman and Insteel Industries.

Diversification Opportunities for Skillful Craftsman and Insteel Industries

0.43

Correlation Coefficient

Skillful Craftsman  Insteel Industries

Very weak diversification

The 3 months correlation between Skillful and Insteel is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Skillful Craftsman Education and Insteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insteel Industries and Skillful Craftsman 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 Skillful Craftsman Education are associated (or correlated) with Insteel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insteel Industries has no effect on the direction of Skillful Craftsman i.e., Skillful Craftsman and Insteel Industries go up and down completely randomly.

Pair Corralation between Skillful Craftsman and Insteel Industries

Given the investment horizon of 90 days Skillful Craftsman Education is expected to under-perform the Insteel Industries. In addition to that, Skillful Craftsman is 1.85 times more volatile than Insteel Industries. It trades about 0.0 of its total potential returns per unit of risk. Insteel Industries is currently generating about 0.01 per unit of volatility. If you would invest  2,802  in Insteel Industries on September 24, 2024 and sell it today you would earn a total of  30.00  from holding Insteel Industries or generate 1.07% return on investment over 90 days.

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

Skillful Craftsman Education  vs.  Insteel Industries

Skillful Craftsman

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Skillful Craftsman Education has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Insteel Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Insteel Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Skillful Craftsman and Insteel Industries

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

The idea behind Skillful Craftsman Education and Insteel Industries 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 Commodity Directory module to find actively traded commodities issued by global exchanges.