Correlation Between SPCG Public and Steel Public

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

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

Diversification Opportunities for SPCG Public and Steel Public

-0.18

Correlation Coefficient

SPCG Public  Steel Public

Good diversification

The 3 months correlation between SPCG and Steel is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding SPCG Public and The Steel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Public and SPCG Public 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 SPCG Public are associated (or correlated) with Steel Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Public has no effect on the direction of SPCG Public i.e., SPCG Public and Steel Public go up and down completely randomly.

Pair Corralation between SPCG Public and Steel Public

Assuming the 90 days trading horizon SPCG Public is expected to generate 0.38 times more return on investment than Steel Public. However, SPCG Public is 2.62 times less risky than Steel Public. It trades about -0.02 of its potential returns per unit of risk. The Steel Public is currently generating about -0.06 per unit of risk. If you would invest  776.00  in SPCG Public on December 30, 2024 and sell it today you would lose (16.00) from holding SPCG Public or give up 2.06% of portfolio value over 90 days.

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

SPCG Public  vs.  The Steel Public

SPCG Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPCG Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, SPCG Public is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Steel Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Steel Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with SPCG Public and Steel Public

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

The idea behind SPCG Public and The Steel Public 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.