Correlation Between Marchex and Steel Connect

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

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

Diversification Opportunities for Marchex and Steel Connect

0.0

Correlation Coefficient

Marchex  Steel Connect

Pay attention - limited upside

The 3 months correlation between Marchex and Steel is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Marchex and Steel Connect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Connect and Marchex 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 Marchex are associated (or correlated) with Steel Connect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Connect has no effect on the direction of Marchex i.e., Marchex and Steel Connect go up and down completely randomly.

Pair Corralation between Marchex and Steel Connect

If you would invest (100.00) in Steel Connect on December 27, 2024 and sell it today you would earn a total of  100.00  from holding Steel Connect or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Marchex  vs.  Steel Connect

Marchex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marchex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, Marchex is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Steel Connect

Risk-Adjusted Performance

Very Weak

Over the last 90 days Steel Connect has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Steel Connect is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Marchex and Steel Connect

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

The idea behind Marchex and Steel Connect 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..