Correlation Between Steelcast and PTC INDUSTRIES

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

By analyzing existing cross correlation between Steelcast Limited and PTC INDUSTRIES LTD, you can compare the effects of market volatilities on Steelcast and PTC INDUSTRIES 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 PTC INDUSTRIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steelcast and PTC INDUSTRIES.

Diversification Opportunities for Steelcast and PTC INDUSTRIES

0.32

Correlation Coefficient

Steelcast  PTC INDUSTRIES

Weak diversification

The 3 months correlation between Steelcast and PTC is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Steelcast Limited and PTC INDUSTRIES LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTC INDUSTRIES LTD 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 PTC INDUSTRIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTC INDUSTRIES LTD has no effect on the direction of Steelcast i.e., Steelcast and PTC INDUSTRIES go up and down completely randomly.

Pair Corralation between Steelcast and PTC INDUSTRIES

Assuming the 90 days trading horizon Steelcast Limited is expected to generate 0.56 times more return on investment than PTC INDUSTRIES. However, Steelcast Limited is 1.78 times less risky than PTC INDUSTRIES. It trades about -0.04 of its potential returns per unit of risk. PTC INDUSTRIES LTD is currently generating about -0.36 per unit of risk. If you would invest  85,256  in Steelcast Limited on December 4, 2024 and sell it today you would lose (1,716) from holding Steelcast Limited or give up 2.01% of portfolio value over 90 days.

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

Steelcast Limited  vs.  PTC INDUSTRIES LTD

Steelcast Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Steelcast Limited are ranked lower than 1 (%) 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 current stock price disturbance, may contribute to short-term losses for the investors.

PTC INDUSTRIES LTD

Risk-Adjusted Performance

Very Weak

Over the last 90 days PTC INDUSTRIES LTD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, PTC INDUSTRIES is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Steelcast and PTC INDUSTRIES

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

The idea behind Steelcast Limited and PTC INDUSTRIES LTD 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.