Correlation Between Hub Power and Aisha Steel

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

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

Diversification Opportunities for Hub Power and Aisha Steel

0.39

Correlation Coefficient

Hub Power  Aisha Steel

Weak diversification

The 3 months correlation between Hub and Aisha is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Hub Power and Aisha Steel Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aisha Steel Mills and Hub Power 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 Hub Power are associated (or correlated) with Aisha Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aisha Steel Mills has no effect on the direction of Hub Power i.e., Hub Power and Aisha Steel go up and down completely randomly.

Pair Corralation between Hub Power and Aisha Steel

Assuming the 90 days trading horizon Hub Power is expected to generate 0.36 times more return on investment than Aisha Steel. However, Hub Power is 2.8 times less risky than Aisha Steel. It trades about 0.18 of its potential returns per unit of risk. Aisha Steel Mills is currently generating about -0.06 per unit of risk. If you would invest  12,808  in Hub Power on December 5, 2024 and sell it today you would earn a total of  582.00  from holding Hub Power or generate 4.54% return on investment over 90 days.

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

Hub Power  vs.  Aisha Steel Mills

Hub Power

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hub Power are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hub Power may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Aisha Steel Mills

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aisha Steel Mills are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Aisha Steel is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Hub Power and Aisha Steel

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

The idea behind Hub Power and Aisha Steel Mills 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.