Correlation Between G Tec and Steelcast

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

By analyzing existing cross correlation between G Tec Jainx Education and Steelcast Limited, you can compare the effects of market volatilities on G Tec and Steelcast 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 G Tec with a short position of Steelcast. Check out your portfolio center. Please also check ongoing floating volatility patterns of G Tec and Steelcast.

Diversification Opportunities for G Tec and Steelcast

0.08

Correlation Coefficient

G Tec  Steelcast

Significant diversification

The 3 months correlation between GTECJAINX and Steelcast is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding G Tec Jainx Education and Steelcast Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steelcast Limited and G Tec 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 G Tec Jainx Education are associated (or correlated) with Steelcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steelcast Limited has no effect on the direction of G Tec i.e., G Tec and Steelcast go up and down completely randomly.

Pair Corralation between G Tec and Steelcast

Assuming the 90 days trading horizon G Tec Jainx Education is expected to under-perform the Steelcast. In addition to that, G Tec is 1.0 times more volatile than Steelcast Limited. It trades about -0.04 of its total potential returns per unit of risk. Steelcast Limited is currently generating about 0.11 per unit of volatility. If you would invest  84,971  in Steelcast Limited on December 29, 2024 and sell it today you would earn a total of  15,154  from holding Steelcast Limited or generate 17.83% return on investment over 90 days.

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

G Tec Jainx Education  vs.  Steelcast Limited

G Tec Jainx

Risk-Adjusted Performance

Very Weak

Over the last 90 days G Tec Jainx Education has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Steelcast Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Steelcast Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental indicators, Steelcast sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with G Tec and Steelcast

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

The idea behind G Tec Jainx Education and Steelcast Limited 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.