Correlation Between Millcon Steel and Hydrotek Public

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

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

Diversification Opportunities for Millcon Steel and Hydrotek Public

0.54

Correlation Coefficient

Millcon Steel  Hydrotek Public

Very weak diversification

The 3 months correlation between Millcon and Hydrotek is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Millcon Steel Public and Hydrotek Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hydrotek Public and Millcon Steel 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 Millcon Steel Public are associated (or correlated) with Hydrotek Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hydrotek Public has no effect on the direction of Millcon Steel i.e., Millcon Steel and Hydrotek Public go up and down completely randomly.

Pair Corralation between Millcon Steel and Hydrotek Public

Assuming the 90 days trading horizon Millcon Steel Public is expected to generate 0.88 times more return on investment than Hydrotek Public. However, Millcon Steel Public is 1.13 times less risky than Hydrotek Public. It trades about 0.02 of its potential returns per unit of risk. Hydrotek Public is currently generating about -0.15 per unit of risk. If you would invest  10.00  in Millcon Steel Public on October 12, 2024 and sell it today you would lose (1.00) from holding Millcon Steel Public or give up 10.0% of portfolio value over 90 days.

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

Millcon Steel Public  vs.  Hydrotek Public

Millcon Steel Public

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Millcon Steel Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Millcon Steel may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Hydrotek Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hydrotek Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Millcon Steel and Hydrotek Public

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

The idea behind Millcon Steel Public and Hydrotek Public 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.