Correlation Between Steel Partners and Vast Renewables

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

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

Diversification Opportunities for Steel Partners and Vast Renewables

-0.28

Correlation Coefficient

Steel Partners  Vast Renewables

Very good diversification

The 3 months correlation between Steel and Vast is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Steel Partners Holdings and Vast Renewables Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vast Renewables and Steel Partners 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 Partners Holdings are associated (or correlated) with Vast Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vast Renewables has no effect on the direction of Steel Partners i.e., Steel Partners and Vast Renewables go up and down completely randomly.

Pair Corralation between Steel Partners and Vast Renewables

Given the investment horizon of 90 days Steel Partners is expected to generate 5.57 times less return on investment than Vast Renewables. But when comparing it to its historical volatility, Steel Partners Holdings is 7.54 times less risky than Vast Renewables. It trades about 0.05 of its potential returns per unit of risk. Vast Renewables Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  228.00  in Vast Renewables Limited on September 26, 2024 and sell it today you would lose (111.00) from holding Vast Renewables Limited or give up 48.68% of portfolio value over 90 days.

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

Steel Partners Holdings  vs.  Vast Renewables Limited

Steel Partners Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Steel Partners Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable essential indicators, Steel Partners is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Vast Renewables

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vast Renewables Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Vast Renewables exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Steel Partners and Vast Renewables

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

The idea behind Steel Partners Holdings and Vast Renewables 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.