Correlation Between SBI Cards and Steel Authority

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Can any of the company-specific risk be diversified away by investing in both SBI Cards and Steel Authority 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 SBI Cards and Steel Authority into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBI Cards and and Steel Authority of, you can compare the effects of market volatilities on SBI Cards and Steel Authority 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 SBI Cards with a short position of Steel Authority. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Cards and Steel Authority.

Diversification Opportunities for SBI Cards and Steel Authority

SBISteelDiversified AwaySBISteelDiversified Away100%
0.22
  Correlation Coefficient

Modest diversification

The 3 months correlation between SBI and Steel is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding SBI Cards and and Steel Authority of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Authority and SBI Cards 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 SBI Cards and are associated (or correlated) with Steel Authority. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Authority has no effect on the direction of SBI Cards i.e., SBI Cards and Steel Authority go up and down completely randomly.

Pair Corralation between SBI Cards and Steel Authority

Assuming the 90 days trading horizon SBI Cards and is expected to generate 0.68 times more return on investment than Steel Authority. However, SBI Cards and is 1.48 times less risky than Steel Authority. It trades about 0.04 of its potential returns per unit of risk. Steel Authority of is currently generating about -0.09 per unit of risk. If you would invest  71,895  in SBI Cards and on October 21, 2024 and sell it today you would earn a total of  2,190  from holding SBI Cards and or generate 3.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

SBI Cards and  vs.  Steel Authority of

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -20-15-10-50
JavaScript chart by amCharts 3.21.15SBICARD SAIL
       Timeline  
SBI Cards 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in SBI Cards and are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, SBI Cards is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan660680700720740760
Steel Authority 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 weak 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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan100105110115120125130

SBI Cards and Steel Authority Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.89-3.67-2.44-1.210.01.222.453.694.93 0.050.100.15
JavaScript chart by amCharts 3.21.15SBICARD SAIL
       Returns  

Pair Trading with SBI Cards and Steel Authority

The main advantage of trading using opposite SBI Cards and Steel Authority positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Cards position performs unexpectedly, Steel Authority 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 Steel Authority will offset losses from the drop in Steel Authority's long position.
The idea behind SBI Cards and and Steel Authority of 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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