Correlation Between Southern Steel and Public Packages

Can any of the company-specific risk be diversified away by investing in both Southern Steel and Public Packages 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 Public Packages 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 Public Packages Holdings, you can compare the effects of market volatilities on Southern Steel and Public Packages 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 Public Packages. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Steel and Public Packages.

Diversification Opportunities for Southern Steel and Public Packages

-0.22

Correlation Coefficient

Southern Steel  Public Packages

Very good diversification

The 3 months correlation between Southern and Public is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Southern Steel Bhd and Public Packages Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Packages Holdings 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 Public Packages. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Packages Holdings has no effect on the direction of Southern Steel i.e., Southern Steel and Public Packages go up and down completely randomly.

Pair Corralation between Southern Steel and Public Packages

Assuming the 90 days trading horizon Southern Steel Bhd is expected to generate 2.13 times more return on investment than Public Packages. However, Southern Steel is 2.13 times more volatile than Public Packages Holdings. It trades about 0.01 of its potential returns per unit of risk. Public Packages Holdings is currently generating about -0.02 per unit of risk. If you would invest  52.00  in Southern Steel Bhd on September 25, 2024 and sell it today you would earn a total of  0.00  from holding Southern Steel Bhd or generate 0.0% return on investment over 90 days.

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

Southern Steel Bhd  vs.  Public Packages Holdings

Southern Steel Bhd

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Southern Steel Bhd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Southern Steel is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Public Packages Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Public Packages Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Public Packages is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Southern Steel and Public Packages

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

The idea behind Southern Steel Bhd and Public Packages Holdings 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.