Correlation Between State Trading and STEEL EXCHANGE

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

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

Diversification Opportunities for State Trading and STEEL EXCHANGE

0.57

Correlation Coefficient

State Trading  STEEL EXCHANGE

Very weak diversification

The 3 months correlation between State and STEEL is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding The State Trading and STEEL EXCHANGE INDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STEEL EXCHANGE INDIA and State Trading 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 The State Trading are associated (or correlated) with STEEL EXCHANGE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STEEL EXCHANGE INDIA has no effect on the direction of State Trading i.e., State Trading and STEEL EXCHANGE go up and down completely randomly.

Pair Corralation between State Trading and STEEL EXCHANGE

Assuming the 90 days trading horizon The State Trading is expected to generate 2.3 times more return on investment than STEEL EXCHANGE. However, State Trading is 2.3 times more volatile than STEEL EXCHANGE INDIA. It trades about -0.06 of its potential returns per unit of risk. STEEL EXCHANGE INDIA is currently generating about -0.23 per unit of risk. If you would invest  16,129  in The State Trading on October 5, 2024 and sell it today you would lose (564.00) from holding The State Trading or give up 3.5% of portfolio value over 90 days.

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

The State Trading  vs.  STEEL EXCHANGE INDIA

State Trading

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The State Trading are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, State Trading may actually be approaching a critical reversion point that can send shares even higher in February 2025.

STEEL EXCHANGE INDIA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STEEL EXCHANGE INDIA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with State Trading and STEEL EXCHANGE

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

The idea behind The State Trading and STEEL EXCHANGE INDIA 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 Commodity Directory module to find actively traded commodities issued by global exchanges.