Correlation Between STEEL EXCHANGE and IdeaForge Technology

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

Diversification Opportunities for STEEL EXCHANGE and IdeaForge Technology

0.66

Correlation Coefficient

STEEL EXCHANGE  IdeaForge Technology

Poor diversification

The 3 months correlation between STEEL and IdeaForge is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding STEEL EXCHANGE INDIA and ideaForge Technology Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ideaForge Technology 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 IdeaForge Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ideaForge Technology has no effect on the direction of STEEL EXCHANGE i.e., STEEL EXCHANGE and IdeaForge Technology go up and down completely randomly.

Pair Corralation between STEEL EXCHANGE and IdeaForge Technology

Assuming the 90 days trading horizon STEEL EXCHANGE INDIA is expected to under-perform the IdeaForge Technology. But the stock apears to be less risky and, when comparing its historical volatility, STEEL EXCHANGE INDIA is 1.17 times less risky than IdeaForge Technology. The stock trades about -0.1 of its potential returns per unit of risk. The ideaForge Technology Limited is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  66,330  in ideaForge Technology Limited on October 21, 2024 and sell it today you would lose (8,715) from holding ideaForge Technology Limited or give up 13.14% 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.  ideaForge Technology 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 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.

ideaForge Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ideaForge Technology Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with STEEL EXCHANGE and IdeaForge Technology

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

The idea behind STEEL EXCHANGE INDIA and ideaForge Technology 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.