Correlation Between STEEL EXCHANGE and Digjam

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

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

Diversification Opportunities for STEEL EXCHANGE and Digjam

0.3

Correlation Coefficient

STEEL EXCHANGE  Digjam

Weak diversification

The 3 months correlation between STEEL and Digjam is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding STEEL EXCHANGE INDIA and Digjam Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digjam Limited and STEEL EXCHANGE 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 EXCHANGE INDIA are associated (or correlated) with Digjam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digjam Limited has no effect on the direction of STEEL EXCHANGE i.e., STEEL EXCHANGE and Digjam go up and down completely randomly.

Pair Corralation between STEEL EXCHANGE and Digjam

Assuming the 90 days trading horizon STEEL EXCHANGE INDIA is expected to generate 0.33 times more return on investment than Digjam. However, STEEL EXCHANGE INDIA is 3.02 times less risky than Digjam. It trades about 0.06 of its potential returns per unit of risk. Digjam Limited is currently generating about -0.17 per unit of risk. If you would invest  1,045  in STEEL EXCHANGE INDIA on September 24, 2024 and sell it today you would earn a total of  13.00  from holding STEEL EXCHANGE INDIA or generate 1.24% return on investment over 90 days.

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

STEEL EXCHANGE INDIA  vs.  Digjam Limited

STEEL EXCHANGE INDIA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STEEL EXCHANGE INDIA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's forward 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.

Digjam Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Digjam Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's primary indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with STEEL EXCHANGE and Digjam

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

The idea behind STEEL EXCHANGE INDIA and Digjam 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.