Correlation Between SAL Steel and Phoenix Mills

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

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

Diversification Opportunities for SAL Steel and Phoenix Mills

-0.07

Correlation Coefficient

SAL Steel  Phoenix Mills

Good diversification

The 3 months correlation between SAL and Phoenix is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding SAL Steel Limited and The Phoenix Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix Mills and SAL 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 SAL Steel Limited are associated (or correlated) with Phoenix Mills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix Mills has no effect on the direction of SAL Steel i.e., SAL Steel and Phoenix Mills go up and down completely randomly.

Pair Corralation between SAL Steel and Phoenix Mills

Assuming the 90 days trading horizon SAL Steel Limited is expected to under-perform the Phoenix Mills. In addition to that, SAL Steel is 1.02 times more volatile than The Phoenix Mills. It trades about -0.07 of its total potential returns per unit of risk. The Phoenix Mills is currently generating about 0.03 per unit of volatility. If you would invest  148,260  in The Phoenix Mills on October 25, 2024 and sell it today you would earn a total of  3,740  from holding The Phoenix Mills or generate 2.52% return on investment over 90 days.

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

SAL Steel Limited  vs.  The Phoenix Mills

SAL Steel Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SAL Steel Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Phoenix Mills

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Phoenix Mills are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Phoenix Mills is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SAL Steel and Phoenix Mills

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

The idea behind SAL Steel Limited and The Phoenix Mills 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.