Correlation Between Steel Authority and Mold Tek
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By analyzing existing cross correlation between Steel Authority of and Mold Tek Packaging Limited, you can compare the effects of market volatilities on Steel Authority and Mold Tek 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 Steel Authority with a short position of Mold Tek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Authority and Mold Tek.
Diversification Opportunities for Steel Authority and Mold Tek
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Steel and Mold is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Steel Authority of and Mold Tek Packaging Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mold Tek Packaging and Steel Authority 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 Steel Authority of are associated (or correlated) with Mold Tek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mold Tek Packaging has no effect on the direction of Steel Authority i.e., Steel Authority and Mold Tek go up and down completely randomly.
Pair Corralation between Steel Authority and Mold Tek
Assuming the 90 days trading horizon Steel Authority of is expected to generate 1.28 times more return on investment than Mold Tek. However, Steel Authority is 1.28 times more volatile than Mold Tek Packaging Limited. It trades about -0.02 of its potential returns per unit of risk. Mold Tek Packaging Limited is currently generating about -0.11 per unit of risk. If you would invest 12,791 in Steel Authority of on September 7, 2024 and sell it today you would lose (544.00) from holding Steel Authority of or give up 4.25% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.41% |
Values | Daily Returns |
Steel Authority of vs. Mold Tek Packaging Limited
Performance |
Timeline |
Steel Authority |
Mold Tek Packaging |
Steel Authority and Mold Tek Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Steel Authority and Mold Tek
The main advantage of trading using opposite Steel Authority and Mold Tek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Authority position performs unexpectedly, Mold Tek 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 Mold Tek will offset losses from the drop in Mold Tek's long position.Steel Authority vs. Paramount Communications Limited | Steel Authority vs. Man Infraconstruction Limited | Steel Authority vs. Dhanuka Agritech Limited | Steel Authority vs. One 97 Communications |
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Check out your portfolio center.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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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