Correlation Between News Network and Millcon Steel

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

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

Diversification Opportunities for News Network and Millcon Steel

-0.25

Correlation Coefficient

News Network  Millcon Steel

Very good diversification

The 3 months correlation between News and Millcon is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding News Network and Millcon Steel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millcon Steel Public and News Network 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 News Network are associated (or correlated) with Millcon Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millcon Steel Public has no effect on the direction of News Network i.e., News Network and Millcon Steel go up and down completely randomly.

Pair Corralation between News Network and Millcon Steel

Assuming the 90 days trading horizon News Network is expected to generate 3.5 times more return on investment than Millcon Steel. However, News Network is 3.5 times more volatile than Millcon Steel Public. It trades about 0.12 of its potential returns per unit of risk. Millcon Steel Public is currently generating about 0.02 per unit of risk. If you would invest  1.00  in News Network on October 23, 2024 and sell it today you would earn a total of  0.00  from holding News Network or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

News Network  vs.  Millcon Steel Public

News Network

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days News Network has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite weak forward-looking signals, News Network disclosed solid returns over the last few months and may actually be approaching a breakup point.

Millcon Steel Public

Risk-Adjusted Performance

1 of 100

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 weak forward-looking signals, Millcon Steel may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with News Network and Millcon Steel

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

The idea behind News Network and Millcon Steel 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.

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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.