Correlation Between SAF Special and 3BB INTERNET

Can any of the company-specific risk be diversified away by investing in both SAF Special and 3BB INTERNET 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 SAF Special and 3BB INTERNET into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SAF Special Steel and 3BB INTERNET INFRASTRUCTURE, you can compare the effects of market volatilities on SAF Special and 3BB INTERNET 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 SAF Special with a short position of 3BB INTERNET. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAF Special and 3BB INTERNET.

Diversification Opportunities for SAF Special and 3BB INTERNET

0.16

Correlation Coefficient

SAF Special  3BB INTERNET

Average diversification

The 3 months correlation between SAF and 3BB is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding SAF Special Steel and 3BB INTERNET INFRASTRUCTURE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3BB INTERNET INFRAST and SAF Special 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 SAF Special Steel are associated (or correlated) with 3BB INTERNET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3BB INTERNET INFRAST has no effect on the direction of SAF Special i.e., SAF Special and 3BB INTERNET go up and down completely randomly.

Pair Corralation between SAF Special and 3BB INTERNET

Assuming the 90 days trading horizon SAF Special Steel is expected to under-perform the 3BB INTERNET. In addition to that, SAF Special is 2.19 times more volatile than 3BB INTERNET INFRASTRUCTURE. It trades about -0.07 of its total potential returns per unit of risk. 3BB INTERNET INFRASTRUCTURE is currently generating about -0.03 per unit of volatility. If you would invest  548.00  in 3BB INTERNET INFRASTRUCTURE on December 1, 2024 and sell it today you would lose (13.00) from holding 3BB INTERNET INFRASTRUCTURE or give up 2.37% of portfolio value over 90 days.

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

SAF Special Steel  vs.  3BB INTERNET INFRASTRUCTURE

SAF Special Steel

Risk-Adjusted Performance

Very Weak

Over the last 90 days SAF Special Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

3BB INTERNET INFRAST

Risk-Adjusted Performance

Very Weak

Over the last 90 days 3BB INTERNET INFRASTRUCTURE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, 3BB INTERNET is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SAF Special and 3BB INTERNET

The main advantage of trading using opposite SAF Special and 3BB INTERNET positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAF Special position performs unexpectedly, 3BB INTERNET 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 3BB INTERNET will offset losses from the drop in 3BB INTERNET's long position.

The idea behind SAF Special Steel and 3BB INTERNET INFRASTRUCTURE 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .