Correlation Between Industrial Investment and Steel Authority

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

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

Diversification Opportunities for Industrial Investment and Steel Authority

-0.51

Correlation Coefficient

Industrial Investment  Steel Authority

Excellent diversification

The 3 months correlation between Industrial and Steel is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Investment Trust and Steel Authority of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Authority and Industrial Investment 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 Industrial Investment Trust 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 Industrial Investment i.e., Industrial Investment and Steel Authority go up and down completely randomly.

Pair Corralation between Industrial Investment and Steel Authority

Assuming the 90 days trading horizon Industrial Investment Trust is expected to under-perform the Steel Authority. In addition to that, Industrial Investment is 1.51 times more volatile than Steel Authority of. It trades about -0.08 of its total potential returns per unit of risk. Steel Authority of is currently generating about -0.04 per unit of volatility. If you would invest  11,853  in Steel Authority of on October 6, 2024 and sell it today you would lose (436.00) from holding Steel Authority of or give up 3.68% of portfolio value over 90 days.

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

Industrial Investment Trust  vs.  Steel Authority of

Industrial Investment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Investment Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Industrial Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Steel Authority

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Industrial Investment and Steel Authority

The main advantage of trading using opposite Industrial Investment and Steel Authority positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Investment 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 Industrial Investment Trust 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.