Correlation Between Sidi Kerir and Iron

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

By analyzing existing cross correlation between Sidi Kerir Petrochemicals and Iron And Steel, you can compare the effects of market volatilities on Sidi Kerir and Iron 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 Sidi Kerir with a short position of Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sidi Kerir and Iron.

Diversification Opportunities for Sidi Kerir and Iron

0.78

Correlation Coefficient

Sidi Kerir  Iron

Poor diversification

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

Pair Corralation between Sidi Kerir and Iron

Assuming the 90 days trading horizon Sidi Kerir Petrochemicals is expected to under-perform the Iron. In addition to that, Sidi Kerir is 1.26 times more volatile than Iron And Steel. It trades about -0.17 of its total potential returns per unit of risk. Iron And Steel is currently generating about -0.06 per unit of volatility. If you would invest  463.00  in Iron And Steel on September 16, 2024 and sell it today you would lose (38.00) from holding Iron And Steel or give up 8.21% of portfolio value over 90 days.

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

Sidi Kerir Petrochemicals  vs.  Iron And Steel

Sidi Kerir Petrochemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sidi Kerir Petrochemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Iron And Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iron And Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Sidi Kerir and Iron

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

The idea behind Sidi Kerir Petrochemicals and Iron And Steel 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.