Correlation Between PT Steel and United States

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

Diversification Opportunities for PT Steel and United States

0.31

Correlation Coefficient

PT Steel  United States

Weak diversification

The 3 months correlation between S08 and United is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding PT Steel Pipe and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of PT Steel i.e., PT Steel and United States go up and down completely randomly.

Pair Corralation between PT Steel and United States

Assuming the 90 days horizon PT Steel Pipe is expected to under-perform the United States. In addition to that, PT Steel is 1.41 times more volatile than United States Steel. It trades about -0.03 of its total potential returns per unit of risk. United States Steel is currently generating about 0.0 per unit of volatility. If you would invest  3,579  in United States Steel on October 26, 2024 and sell it today you would lose (87.00) from holding United States Steel or give up 2.43% of portfolio value over 90 days.

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

PT Steel Pipe  vs.  United States Steel

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 latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

United States Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, United States is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PT Steel and United States

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

The idea behind PT Steel Pipe and United States Steel 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 Transaction History module to view history of all your transactions and understand their impact on performance.