Correlation Between SAL Steel and SBI Cards

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

Diversification Opportunities for SAL Steel and SBI Cards

-0.78

Correlation Coefficient

SAL Steel  SBI Cards

Pay attention - limited upside

The 3 months correlation between SAL and SBI is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding SAL Steel Limited and SBI Cards and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Cards 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 SBI Cards. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Cards has no effect on the direction of SAL Steel i.e., SAL Steel and SBI Cards go up and down completely randomly.

Pair Corralation between SAL Steel and SBI Cards

Assuming the 90 days trading horizon SAL Steel Limited is expected to under-perform the SBI Cards. In addition to that, SAL Steel is 2.54 times more volatile than SBI Cards and. It trades about -0.05 of its total potential returns per unit of risk. SBI Cards and is currently generating about 0.2 per unit of volatility. If you would invest  69,383  in SBI Cards and on December 24, 2024 and sell it today you would earn a total of  16,367  from holding SBI Cards and or generate 23.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

SAL Steel Limited  vs.  SBI Cards and

SAL Steel Limited

Risk-Adjusted Performance

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 April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

SBI Cards

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SBI Cards and are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, SBI Cards exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SAL Steel and SBI Cards

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

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