Correlation Between State Trading and Steel Authority

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

By analyzing existing cross correlation between The State Trading and Steel Authority of, you can compare the effects of market volatilities on State Trading and Steel Authority 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 State Trading with a short position of Steel Authority. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Trading and Steel Authority.

Diversification Opportunities for State Trading and Steel Authority

0.66

Correlation Coefficient

State Trading  Steel Authority

Poor diversification

The 3 months correlation between State and Steel is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding The State Trading and Steel Authority of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Authority and State Trading 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 The State Trading are associated (or correlated) with Steel Authority. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Authority has no effect on the direction of State Trading i.e., State Trading and Steel Authority go up and down completely randomly.

Pair Corralation between State Trading and Steel Authority

Assuming the 90 days trading horizon The State Trading is expected to generate 1.27 times more return on investment than Steel Authority. However, State Trading is 1.27 times more volatile than Steel Authority of. It trades about 0.05 of its potential returns per unit of risk. Steel Authority of is currently generating about 0.05 per unit of risk. If you would invest  11,610  in The State Trading on September 23, 2024 and sell it today you would earn a total of  3,718  from holding The State Trading or generate 32.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.25%
Values	Daily Returns

The State Trading  vs.  Steel Authority of

State Trading

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The State Trading has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Steel Authority

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Steel Authority of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with State Trading and Steel Authority

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

The idea behind The State Trading and Steel Authority of 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.