Correlation Between Le Travenues and Steelcast

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

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

Diversification Opportunities for Le Travenues and Steelcast

-0.05

Correlation Coefficient

Le Travenues  Steelcast

Good diversification

The 3 months correlation between IXIGO and Steelcast is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Le Travenues Technology and Steelcast Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steelcast Limited and Le Travenues 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 Le Travenues Technology 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 Le Travenues i.e., Le Travenues and Steelcast go up and down completely randomly.

Pair Corralation between Le Travenues and Steelcast

Assuming the 90 days trading horizon Le Travenues is expected to generate 5.68 times less return on investment than Steelcast. In addition to that, Le Travenues is 1.08 times more volatile than Steelcast Limited. It trades about 0.02 of its total potential returns per unit of risk. Steelcast Limited is currently generating about 0.1 per unit of volatility. If you would invest  77,710  in Steelcast Limited on September 14, 2024 and sell it today you would earn a total of  11,375  from holding Steelcast Limited or generate 14.64% return on investment over 90 days.

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

Le Travenues Technology  vs.  Steelcast Limited

Le Travenues Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Le Travenues Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Le Travenues is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Steelcast Limited

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Steelcast Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Steelcast sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Le Travenues and Steelcast

The main advantage of trading using opposite Le Travenues and Steelcast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Le Travenues 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 Le Travenues Technology 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.