Correlation Between Steel Authority and Ashapura Minechem

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

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

Diversification Opportunities for Steel Authority and Ashapura Minechem

-0.29

Correlation Coefficient

Steel Authority  Ashapura Minechem

Very good diversification

The 3 months correlation between Steel and Ashapura is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Steel Authority of and Ashapura Minechem Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashapura Minechem and Steel Authority 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 Steel Authority of are associated (or correlated) with Ashapura Minechem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashapura Minechem has no effect on the direction of Steel Authority i.e., Steel Authority and Ashapura Minechem go up and down completely randomly.

Pair Corralation between Steel Authority and Ashapura Minechem

Assuming the 90 days trading horizon Steel Authority of is expected to under-perform the Ashapura Minechem. But the stock apears to be less risky and, when comparing its historical volatility, Steel Authority of is 1.54 times less risky than Ashapura Minechem. The stock trades about -0.08 of its potential returns per unit of risk. The Ashapura Minechem Limited is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  38,910  in Ashapura Minechem Limited on December 4, 2024 and sell it today you would lose (5,245) from holding Ashapura Minechem Limited or give up 13.48% of portfolio value over 90 days.

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

Steel Authority of  vs.  Ashapura Minechem Limited

Steel Authority

Risk-Adjusted Performance

Very Weak

Over the last 90 days Steel Authority of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Ashapura Minechem

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ashapura Minechem Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's primary indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Steel Authority and Ashapura Minechem

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

The idea behind Steel Authority of and Ashapura Minechem Limited 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.