Correlation Between STEEL EXCHANGE and CREDITACCESS GRAMEEN

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

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

Diversification Opportunities for STEEL EXCHANGE and CREDITACCESS GRAMEEN

0.79

Correlation Coefficient

STEEL EXCHANGE  CREDITACCESS GRAMEEN

Poor diversification

The 3 months correlation between STEEL and CREDITACCESS is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding STEEL EXCHANGE INDIA and CREDITACCESS GRAMEEN LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CREDITACCESS GRAMEEN and STEEL EXCHANGE 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 EXCHANGE INDIA are associated (or correlated) with CREDITACCESS GRAMEEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CREDITACCESS GRAMEEN has no effect on the direction of STEEL EXCHANGE i.e., STEEL EXCHANGE and CREDITACCESS GRAMEEN go up and down completely randomly.

Pair Corralation between STEEL EXCHANGE and CREDITACCESS GRAMEEN

Assuming the 90 days trading horizon STEEL EXCHANGE INDIA is expected to generate 0.93 times more return on investment than CREDITACCESS GRAMEEN. However, STEEL EXCHANGE INDIA is 1.07 times less risky than CREDITACCESS GRAMEEN. It trades about -0.06 of its potential returns per unit of risk. CREDITACCESS GRAMEEN LIMITED is currently generating about -0.07 per unit of risk. If you would invest  1,400  in STEEL EXCHANGE INDIA on October 12, 2024 and sell it today you would lose (381.00) from holding STEEL EXCHANGE INDIA or give up 27.21% of portfolio value over 90 days.

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

STEEL EXCHANGE INDIA  vs.  CREDITACCESS GRAMEEN LIMITED

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 unfluctuating performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

CREDITACCESS GRAMEEN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CREDITACCESS GRAMEEN LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CREDITACCESS GRAMEEN is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with STEEL EXCHANGE and CREDITACCESS GRAMEEN

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

The idea behind STEEL EXCHANGE INDIA and CREDITACCESS GRAMEEN 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.