Correlation Between Fineotex Chemical and Steel Authority

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

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

Diversification Opportunities for Fineotex Chemical and Steel Authority

0.59

Correlation Coefficient

Fineotex Chemical  Steel Authority

Very weak diversification

The 3 months correlation between Fineotex and Steel is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Fineotex Chemical Limited and Steel Authority of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Authority and Fineotex Chemical 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 Fineotex Chemical Limited are associated (or correlated) with Steel Authority. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Authority has no effect on the direction of Fineotex Chemical i.e., Fineotex Chemical and Steel Authority go up and down completely randomly.

Pair Corralation between Fineotex Chemical and Steel Authority

Assuming the 90 days trading horizon Fineotex Chemical Limited is expected to under-perform the Steel Authority. In addition to that, Fineotex Chemical is 1.11 times more volatile than Steel Authority of. It trades about -0.31 of its total potential returns per unit of risk. Steel Authority of is currently generating about -0.06 per unit of volatility. If you would invest  11,407  in Steel Authority of on December 2, 2024 and sell it today you would lose (905.00) from holding Steel Authority of or give up 7.93% of portfolio value over 90 days.

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

Fineotex Chemical Limited  vs.  Steel Authority of

Fineotex Chemical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fineotex Chemical Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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.

Steel Authority

Risk-Adjusted Performance

Very Weak

Over the last 90 days Steel Authority of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Fineotex Chemical and Steel Authority

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

The idea behind Fineotex Chemical Limited and Steel Authority of 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.