Correlation Between STEEL EXCHANGE and Hemisphere Properties

Can any of the company-specific risk be diversified away by investing in both STEEL EXCHANGE and Hemisphere Properties 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 Hemisphere Properties 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 Hemisphere Properties India, you can compare the effects of market volatilities on STEEL EXCHANGE and Hemisphere Properties 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 Hemisphere Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of STEEL EXCHANGE and Hemisphere Properties.

Diversification Opportunities for STEEL EXCHANGE and Hemisphere Properties

0.86

Correlation Coefficient

STEEL EXCHANGE  Hemisphere Properties

Very poor diversification

The 3 months correlation between STEEL and Hemisphere is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding STEEL EXCHANGE INDIA and Hemisphere Properties India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hemisphere Properties 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 Hemisphere Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hemisphere Properties has no effect on the direction of STEEL EXCHANGE i.e., STEEL EXCHANGE and Hemisphere Properties go up and down completely randomly.

Pair Corralation between STEEL EXCHANGE and Hemisphere Properties

Assuming the 90 days trading horizon STEEL EXCHANGE INDIA is expected to under-perform the Hemisphere Properties. In addition to that, STEEL EXCHANGE is 1.18 times more volatile than Hemisphere Properties India. It trades about -0.01 of its total potential returns per unit of risk. Hemisphere Properties India is currently generating about 0.05 per unit of volatility. If you would invest  10,410  in Hemisphere Properties India on October 10, 2024 and sell it today you would earn a total of  6,462  from holding Hemisphere Properties India or generate 62.07% return on investment over 90 days.

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

STEEL EXCHANGE INDIA  vs.  Hemisphere Properties India

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 uncertain 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.

Hemisphere Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hemisphere Properties India has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with STEEL EXCHANGE and Hemisphere Properties

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

The idea behind STEEL EXCHANGE INDIA and Hemisphere Properties 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.