Correlation Between Steelcast and Mangalore Chemicals

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Can any of the company-specific risk be diversified away by investing in both Steelcast and Mangalore Chemicals 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 Mangalore Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steelcast Limited and Mangalore Chemicals Fertilizers, you can compare the effects of market volatilities on Steelcast and Mangalore Chemicals 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 Mangalore Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steelcast and Mangalore Chemicals.

Diversification Opportunities for Steelcast and Mangalore Chemicals

SteelcastMangaloreDiversified AwaySteelcastMangaloreDiversified Away100%
0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between Steelcast and Mangalore is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Steelcast Limited and Mangalore Chemicals Fertilizer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mangalore Chemicals 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 Mangalore Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mangalore Chemicals has no effect on the direction of Steelcast i.e., Steelcast and Mangalore Chemicals go up and down completely randomly.

Pair Corralation between Steelcast and Mangalore Chemicals

Assuming the 90 days trading horizon Steelcast Limited is expected to generate 1.07 times more return on investment than Mangalore Chemicals. However, Steelcast is 1.07 times more volatile than Mangalore Chemicals Fertilizers. It trades about 0.03 of its potential returns per unit of risk. Mangalore Chemicals Fertilizers is currently generating about 0.02 per unit of risk. If you would invest  78,534  in Steelcast Limited on November 23, 2024 and sell it today you would earn a total of  1,946  from holding Steelcast Limited or generate 2.48% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Steelcast Limited  vs.  Mangalore Chemicals Fertilizer

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 0510152025
JavaScript chart by amCharts 3.21.15STEELCAS MANGCHEFER
       Timeline  
Steelcast Limited 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Steelcast Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Steelcast is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb800850900
Mangalore Chemicals 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Mangalore Chemicals Fertilizers are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Mangalore Chemicals is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb145150155160165170175180

Steelcast and Mangalore Chemicals Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-9.04-6.77-4.5-2.230.03882.294.626.959.28 0.020.030.040.05
JavaScript chart by amCharts 3.21.15STEELCAS MANGCHEFER
       Returns  

Pair Trading with Steelcast and Mangalore Chemicals

The main advantage of trading using opposite Steelcast and Mangalore Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steelcast position performs unexpectedly, Mangalore Chemicals 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 Mangalore Chemicals will offset losses from the drop in Mangalore Chemicals' long position.
The idea behind Steelcast Limited and Mangalore Chemicals Fertilizers 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 Stocks Directory module to find actively traded stocks across global markets.

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