Correlation Between Vulcan Steel and FSA

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

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

Diversification Opportunities for Vulcan Steel and FSA

0.55

Correlation Coefficient

Vulcan Steel  FSA

Very weak diversification

The 3 months correlation between Vulcan and FSA is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Steel and FSA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FSA Group and Vulcan Steel 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 Vulcan Steel are associated (or correlated) with FSA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FSA Group has no effect on the direction of Vulcan Steel i.e., Vulcan Steel and FSA go up and down completely randomly.

Pair Corralation between Vulcan Steel and FSA

Assuming the 90 days trading horizon Vulcan Steel is expected to generate 1.18 times less return on investment than FSA. In addition to that, Vulcan Steel is 1.6 times more volatile than FSA Group. It trades about 0.04 of its total potential returns per unit of risk. FSA Group is currently generating about 0.07 per unit of volatility. If you would invest  79.00  in FSA Group on December 21, 2024 and sell it today you would earn a total of  6.00  from holding FSA Group or generate 7.59% return on investment over 90 days.

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

Vulcan Steel  vs.  FSA Group

Vulcan Steel

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Steel are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Vulcan Steel may actually be approaching a critical reversion point that can send shares even higher in April 2025.

FSA Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FSA Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, FSA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Vulcan Steel and FSA

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

The idea behind Vulcan Steel and FSA Group 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.