Correlation Between PT Steel and FedEx Corp

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

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

Diversification Opportunities for PT Steel and FedEx Corp

0.22

Correlation Coefficient

PT Steel  FedEx Corp

Modest diversification

The 3 months correlation between S08 and FedEx is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding PT Steel Pipe and FedEx Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FedEx Corp and PT 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 PT Steel Pipe are associated (or correlated) with FedEx Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FedEx Corp has no effect on the direction of PT Steel i.e., PT Steel and FedEx Corp go up and down completely randomly.

Pair Corralation between PT Steel and FedEx Corp

Assuming the 90 days horizon PT Steel Pipe is expected to generate 1.89 times more return on investment than FedEx Corp. However, PT Steel is 1.89 times more volatile than FedEx Corp. It trades about 0.04 of its potential returns per unit of risk. FedEx Corp is currently generating about -0.1 per unit of risk. If you would invest  1.10  in PT Steel Pipe on December 19, 2024 and sell it today you would earn a total of  0.05  from holding PT Steel Pipe or generate 4.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

PT Steel Pipe  vs.  FedEx Corp

PT Steel Pipe

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PT Steel Pipe are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PT Steel may actually be approaching a critical reversion point that can send shares even higher in April 2025.

FedEx Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days FedEx Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with PT Steel and FedEx Corp

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

The idea behind PT Steel Pipe and FedEx Corp 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.