Correlation Between Steel Partners and Mammoth Energy

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

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

Diversification Opportunities for Steel Partners and Mammoth Energy

-0.03

Correlation Coefficient

Steel Partners  Mammoth Energy

Good diversification

The 3 months correlation between Steel and Mammoth is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Steel Partners Holdings and Mammoth Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mammoth Energy Services and Steel Partners 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 Steel Partners Holdings are associated (or correlated) with Mammoth Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mammoth Energy Services has no effect on the direction of Steel Partners i.e., Steel Partners and Mammoth Energy go up and down completely randomly.

Pair Corralation between Steel Partners and Mammoth Energy

Assuming the 90 days trading horizon Steel Partners Holdings is expected to generate 0.05 times more return on investment than Mammoth Energy. However, Steel Partners Holdings is 18.2 times less risky than Mammoth Energy. It trades about 0.32 of its potential returns per unit of risk. Mammoth Energy Services is currently generating about 0.0 per unit of risk. If you would invest  2,350  in Steel Partners Holdings on September 2, 2024 and sell it today you would earn a total of  93.00  from holding Steel Partners Holdings or generate 3.96% return on investment over 90 days.

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

Steel Partners Holdings  vs.  Mammoth Energy Services

Steel Partners Holdings

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Steel Partners Holdings are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Steel Partners is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mammoth Energy Services

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Steel Partners and Mammoth Energy

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

The idea behind Steel Partners Holdings and Mammoth Energy Services 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.