Correlation Between Zodiac Clothing and Steelcast

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

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

Diversification Opportunities for Zodiac Clothing and Steelcast

0.88

Correlation Coefficient

Zodiac Clothing  Steelcast

Very poor diversification

The 3 months correlation between Zodiac and Steelcast is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Zodiac Clothing and Steelcast Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steelcast Limited and Zodiac Clothing 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 Zodiac Clothing are associated (or correlated) with Steelcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steelcast Limited has no effect on the direction of Zodiac Clothing i.e., Zodiac Clothing and Steelcast go up and down completely randomly.

Pair Corralation between Zodiac Clothing and Steelcast

Assuming the 90 days trading horizon Zodiac Clothing is expected to under-perform the Steelcast. In addition to that, Zodiac Clothing is 1.31 times more volatile than Steelcast Limited. It trades about -0.18 of its total potential returns per unit of risk. Steelcast Limited is currently generating about 0.01 per unit of volatility. If you would invest  89,790  in Steelcast Limited on October 9, 2024 and sell it today you would lose (65.00) from holding Steelcast Limited or give up 0.07% of portfolio value over 90 days.

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

Zodiac Clothing  vs.  Steelcast Limited

Zodiac Clothing

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zodiac Clothing are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Zodiac Clothing may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Steelcast Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Steelcast Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Steelcast sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zodiac Clothing and Steelcast

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

The idea behind Zodiac Clothing and Steelcast 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.