Correlation Between PT Steel and ANGANG STEEL

Can any of the company-specific risk be diversified away by investing in both PT Steel and ANGANG 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 PT Steel and ANGANG STEEL 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 ANGANG STEEL H , you can compare the effects of market volatilities on PT Steel and ANGANG 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 PT Steel with a short position of ANGANG STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Steel and ANGANG STEEL.

Diversification Opportunities for PT Steel and ANGANG STEEL

-0.1

Correlation Coefficient

PT Steel  ANGANG STEEL

Good diversification

The 3 months correlation between S08 and ANGANG is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding PT Steel Pipe and ANGANG STEEL H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANGANG STEEL H 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 ANGANG STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANGANG STEEL H has no effect on the direction of PT Steel i.e., PT Steel and ANGANG STEEL go up and down completely randomly.

Pair Corralation between PT Steel and ANGANG STEEL

Assuming the 90 days horizon PT Steel Pipe is expected to generate 1.64 times more return on investment than ANGANG STEEL. However, PT Steel is 1.64 times more volatile than ANGANG STEEL H . It trades about 0.03 of its potential returns per unit of risk. ANGANG STEEL H is currently generating about 0.0 per unit of risk. If you would invest  1.20  in PT Steel Pipe on October 24, 2024 and sell it today you would lose (0.05) from holding PT Steel Pipe or give up 4.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.76%
Values	Daily Returns

PT Steel Pipe  vs.  ANGANG STEEL H

PT Steel Pipe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Steel Pipe has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ANGANG STEEL H

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ANGANG STEEL H are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, ANGANG STEEL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PT Steel and ANGANG STEEL

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

The idea behind PT Steel Pipe and ANGANG STEEL H 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..