Correlation Between Regional Container and Permsin Steel

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

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

Diversification Opportunities for Regional Container and Permsin Steel

-0.3

Correlation Coefficient

Regional Container  Permsin Steel

Very good diversification

The 3 months correlation between Regional and Permsin is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Regional Container Lines and Permsin Steel Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Permsin Steel Works and Regional Container 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 Regional Container Lines are associated (or correlated) with Permsin Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Permsin Steel Works has no effect on the direction of Regional Container i.e., Regional Container and Permsin Steel go up and down completely randomly.

Pair Corralation between Regional Container and Permsin Steel

Assuming the 90 days trading horizon Regional Container Lines is expected to under-perform the Permsin Steel. But the stock apears to be less risky and, when comparing its historical volatility, Regional Container Lines is 3.62 times less risky than Permsin Steel. The stock trades about -0.26 of its potential returns per unit of risk. The Permsin Steel Works is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  43.00  in Permsin Steel Works on October 23, 2024 and sell it today you would lose (3.00) from holding Permsin Steel Works or give up 6.98% of portfolio value over 90 days.

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

Regional Container Lines  vs.  Permsin Steel Works

Regional Container Lines

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Regional Container Lines are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Regional Container may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Permsin Steel Works

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Permsin Steel Works 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 forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Regional Container and Permsin Steel

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

The idea behind Regional Container Lines and Permsin Steel Works 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.