Correlation Between International Steels and Invest Capital

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

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

Diversification Opportunities for International Steels and Invest Capital

0.5

Correlation Coefficient

International Steels  Invest Capital

Very weak diversification

The 3 months correlation between International and Invest is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding International Steels and Invest Capital Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invest Capital Investment and International Steels 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 International Steels are associated (or correlated) with Invest Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invest Capital Investment has no effect on the direction of International Steels i.e., International Steels and Invest Capital go up and down completely randomly.

Pair Corralation between International Steels and Invest Capital

Assuming the 90 days trading horizon International Steels is expected to generate 0.66 times more return on investment than Invest Capital. However, International Steels is 1.53 times less risky than Invest Capital. It trades about -0.04 of its potential returns per unit of risk. Invest Capital Investment is currently generating about -0.08 per unit of risk. If you would invest  8,595  in International Steels on December 26, 2024 and sell it today you would lose (574.00) from holding International Steels or give up 6.68% of portfolio value over 90 days.

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

International Steels  vs.  Invest Capital Investment

International Steels

Risk-Adjusted Performance

Very Weak

Over the last 90 days International Steels has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, International Steels is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Invest Capital Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invest Capital Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with International Steels and Invest Capital

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

The idea behind International Steels and Invest Capital Investment 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.

Check out your portfolio center.

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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.