Correlation Between Kalyani Steels and Steel Authority

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

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

Diversification Opportunities for Kalyani Steels and Steel Authority

0.47

Correlation Coefficient

Kalyani Steels  Steel Authority

Very weak diversification

The 3 months correlation between Kalyani and Steel is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Kalyani Steels 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 Kalyani 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 Kalyani Steels 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 Kalyani Steels i.e., Kalyani Steels and Steel Authority go up and down completely randomly.

Pair Corralation between Kalyani Steels and Steel Authority

Assuming the 90 days trading horizon Kalyani Steels Limited is expected to under-perform the Steel Authority. In addition to that, Kalyani Steels is 1.16 times more volatile than Steel Authority of. It trades about -0.2 of its total potential returns per unit of risk. Steel Authority of is currently generating about 0.02 per unit of volatility. If you would invest  11,173  in Steel Authority of on December 28, 2024 and sell it today you would earn a total of  215.00  from holding Steel Authority of or generate 1.92% return on investment over 90 days.

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

Kalyani Steels Limited  vs.  Steel Authority of

Kalyani Steels

Risk-Adjusted Performance

Very Weak

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

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Steel Authority of are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Steel Authority is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Kalyani Steels and Steel Authority

The main advantage of trading using opposite Kalyani Steels and Steel Authority positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kalyani Steels 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 Kalyani Steels 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.