Correlation Between Stelco Holdings and Synalloy

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

By analyzing existing cross correlation between Stelco Holdings and Synalloy, you can compare the effects of market volatilities on Stelco Holdings and Synalloy 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 Stelco Holdings with a short position of Synalloy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stelco Holdings and Synalloy.

Diversification Opportunities for Stelco Holdings and Synalloy

0.48

Correlation Coefficient

Stelco Holdings  Synalloy

Very weak diversification

The 3 months correlation between Stelco and Synalloy is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Stelco Holdings and Synalloy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synalloy and Stelco Holdings 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 Stelco Holdings are associated (or correlated) with Synalloy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synalloy has no effect on the direction of Stelco Holdings i.e., Stelco Holdings and Synalloy go up and down completely randomly.

Pair Corralation between Stelco Holdings and Synalloy

Assuming the 90 days horizon Stelco Holdings is expected to generate 3.14 times more return on investment than Synalloy. However, Stelco Holdings is 3.14 times more volatile than Synalloy. It trades about 0.11 of its potential returns per unit of risk. Synalloy is currently generating about 0.08 per unit of risk. If you would invest  2,767  in Stelco Holdings on September 28, 2024 and sell it today you would earn a total of  2,174  from holding Stelco Holdings or generate 78.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	72.0%
Values	Daily Returns

Stelco Holdings  vs.  Synalloy

Stelco Holdings

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Stelco Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Stelco Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Synalloy

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Synalloy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Synalloy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stelco Holdings and Synalloy

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

The idea behind Stelco Holdings and Synalloy 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.