Correlation Between Steel Authority and Landmark Cars

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

Diversification Opportunities for Steel Authority and Landmark Cars

0.55

Correlation Coefficient

Steel Authority  Landmark Cars

Very weak diversification

The 3 months correlation between Steel and Landmark is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Steel Authority of and Landmark Cars Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Landmark Cars Limited 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 Landmark Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Landmark Cars Limited has no effect on the direction of Steel Authority i.e., Steel Authority and Landmark Cars go up and down completely randomly.

Pair Corralation between Steel Authority and Landmark Cars

Assuming the 90 days trading horizon Steel Authority of is expected to generate 1.08 times more return on investment than Landmark Cars. However, Steel Authority is 1.08 times more volatile than Landmark Cars Limited. It trades about 0.03 of its potential returns per unit of risk. Landmark Cars Limited is currently generating about 0.01 per unit of risk. If you would invest  8,857  in Steel Authority of on October 11, 2024 and sell it today you would earn a total of  1,969  from holding Steel Authority of or generate 22.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Steel Authority of  vs.  Landmark Cars Limited

Steel Authority

Risk-Adjusted Performance

0 of 100

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 unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Landmark Cars Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Landmark Cars Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Landmark Cars is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Steel Authority and Landmark Cars

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

The idea behind Steel Authority of and Landmark Cars 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.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.