Correlation Between Steel Public and NAT ABSOLUTE

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

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

Diversification Opportunities for Steel Public and NAT ABSOLUTE

0.48

Correlation Coefficient

Steel Public  NAT ABSOLUTE

Very weak diversification

The 3 months correlation between Steel and NAT is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding The Steel Public and NAT ABSOLUTE TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAT ABSOLUTE TECHNOLOGIES and Steel Public 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 Steel Public are associated (or correlated) with NAT ABSOLUTE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAT ABSOLUTE TECHNOLOGIES has no effect on the direction of Steel Public i.e., Steel Public and NAT ABSOLUTE go up and down completely randomly.

Pair Corralation between Steel Public and NAT ABSOLUTE

Assuming the 90 days trading horizon The Steel Public is expected to under-perform the NAT ABSOLUTE. In addition to that, Steel Public is 1.19 times more volatile than NAT ABSOLUTE TECHNOLOGIES. It trades about -0.16 of its total potential returns per unit of risk. NAT ABSOLUTE TECHNOLOGIES is currently generating about -0.05 per unit of volatility. If you would invest  505.00  in NAT ABSOLUTE TECHNOLOGIES on September 5, 2024 and sell it today you would lose (45.00) from holding NAT ABSOLUTE TECHNOLOGIES or give up 8.91% of portfolio value over 90 days.

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

The Steel Public  vs.  NAT ABSOLUTE TECHNOLOGIES

Steel Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Steel Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

NAT ABSOLUTE TECHNOLOGIES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NAT ABSOLUTE TECHNOLOGIES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic 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 Public and NAT ABSOLUTE

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

The idea behind The Steel Public and NAT ABSOLUTE TECHNOLOGIES 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.