Correlation Between SAL Steel and AUTHUM INVESTMENT

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

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

Diversification Opportunities for SAL Steel and AUTHUM INVESTMENT

0.51

Correlation Coefficient

SAL Steel  AUTHUM INVESTMENT

Very weak diversification

The 3 months correlation between SAL and AUTHUM is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding SAL Steel Limited and AUTHUM INVESTMENT INFRASTRUCTU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUTHUM INVESTMENT and SAL 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 SAL Steel Limited are associated (or correlated) with AUTHUM INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUTHUM INVESTMENT has no effect on the direction of SAL Steel i.e., SAL Steel and AUTHUM INVESTMENT go up and down completely randomly.

Pair Corralation between SAL Steel and AUTHUM INVESTMENT

Assuming the 90 days trading horizon SAL Steel Limited is expected to under-perform the AUTHUM INVESTMENT. In addition to that, SAL Steel is 1.18 times more volatile than AUTHUM INVESTMENT INFRASTRUCTU. It trades about -0.01 of its total potential returns per unit of risk. AUTHUM INVESTMENT INFRASTRUCTU is currently generating about 0.08 per unit of volatility. If you would invest  160,595  in AUTHUM INVESTMENT INFRASTRUCTU on September 12, 2024 and sell it today you would earn a total of  19,050  from holding AUTHUM INVESTMENT INFRASTRUCTU or generate 11.86% return on investment over 90 days.

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

SAL Steel Limited  vs.  AUTHUM INVESTMENT INFRASTRUCTU

SAL Steel Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SAL Steel Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, SAL Steel is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

AUTHUM INVESTMENT

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AUTHUM INVESTMENT INFRASTRUCTU are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, AUTHUM INVESTMENT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SAL Steel and AUTHUM INVESTMENT

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

The idea behind SAL Steel Limited and AUTHUM INVESTMENT INFRASTRUCTU 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.