Correlation Between Southern Steel and Coraza Integrated

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

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

Diversification Opportunities for Southern Steel and Coraza Integrated

0.26

Correlation Coefficient

Southern Steel  Coraza Integrated

Modest diversification

The 3 months correlation between Southern and Coraza is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Southern Steel Bhd and Coraza Integrated Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coraza Integrated and Southern 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 Southern Steel Bhd are associated (or correlated) with Coraza Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coraza Integrated has no effect on the direction of Southern Steel i.e., Southern Steel and Coraza Integrated go up and down completely randomly.

Pair Corralation between Southern Steel and Coraza Integrated

Assuming the 90 days trading horizon Southern Steel is expected to generate 2.9 times less return on investment than Coraza Integrated. But when comparing it to its historical volatility, Southern Steel Bhd is 1.9 times less risky than Coraza Integrated. It trades about 0.08 of its potential returns per unit of risk. Coraza Integrated Technology is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  40.00  in Coraza Integrated Technology on September 15, 2024 and sell it today you would earn a total of  16.00  from holding Coraza Integrated Technology or generate 40.0% return on investment over 90 days.

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

Southern Steel Bhd  vs.  Coraza Integrated Technology

Southern Steel Bhd

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Southern Steel Bhd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Southern Steel disclosed solid returns over the last few months and may actually be approaching a breakup point.

Coraza Integrated

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coraza Integrated Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Coraza Integrated disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Southern Steel and Coraza Integrated

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

The idea behind Southern Steel Bhd and Coraza Integrated Technology 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.