Correlation Between Steelcast and Hardwyn India

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

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

Diversification Opportunities for Steelcast and Hardwyn India

-0.76

Correlation Coefficient

Steelcast  Hardwyn India

Pay attention - limited upside

The 3 months correlation between Steelcast and Hardwyn is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Steelcast Limited and Hardwyn India Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hardwyn India Limited and Steelcast 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 Steelcast Limited are associated (or correlated) with Hardwyn India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hardwyn India Limited has no effect on the direction of Steelcast i.e., Steelcast and Hardwyn India go up and down completely randomly.

Pair Corralation between Steelcast and Hardwyn India

Assuming the 90 days trading horizon Steelcast Limited is expected to generate 0.35 times more return on investment than Hardwyn India. However, Steelcast Limited is 2.85 times less risky than Hardwyn India. It trades about 0.1 of its potential returns per unit of risk. Hardwyn India Limited is currently generating about -0.07 per unit of risk. If you would invest  76,233  in Steelcast Limited on October 15, 2024 and sell it today you would earn a total of  11,657  from holding Steelcast Limited or generate 15.29% return on investment over 90 days.

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

Steelcast Limited  vs.  Hardwyn India Limited

Steelcast Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Steelcast Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Steelcast sustained solid returns over the last few months and may actually be approaching a breakup point.

Hardwyn India Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hardwyn India Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Steelcast and Hardwyn India

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

The idea behind Steelcast Limited and Hardwyn India Limited 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.