Correlation Between TMT Steel and General Environmental
Can any of the company-specific risk be diversified away by investing in both TMT Steel and General Environmental 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 TMT Steel and General Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TMT Steel Public and General Environmental Conservation, you can compare the effects of market volatilities on TMT Steel and General Environmental 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 TMT Steel with a short position of General Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of TMT Steel and General Environmental.
Diversification Opportunities for TMT Steel and General Environmental
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TMT and General is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding TMT Steel Public and General Environmental Conserva in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Environmental and TMT 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 TMT Steel Public are associated (or correlated) with General Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Environmental has no effect on the direction of TMT Steel i.e., TMT Steel and General Environmental go up and down completely randomly.
Pair Corralation between TMT Steel and General Environmental
Assuming the 90 days trading horizon TMT Steel Public is expected to under-perform the General Environmental. But the stock apears to be less risky and, when comparing its historical volatility, TMT Steel Public is 1.28 times less risky than General Environmental. The stock trades about -0.66 of its potential returns per unit of risk. The General Environmental Conservation is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 47.00 in General Environmental Conservation on September 13, 2024 and sell it today you would earn a total of 1.00 from holding General Environmental Conservation or generate 2.13% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
TMT Steel Public vs. General Environmental Conserva
Performance |
Timeline |
TMT Steel Public |
General Environmental |
TMT Steel and General Environmental Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with TMT Steel and General Environmental
The main advantage of trading using opposite TMT Steel and General Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TMT Steel position performs unexpectedly, General Environmental 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 General Environmental will offset losses from the drop in General Environmental's long position.TMT Steel vs. Thantawan Industry Public | TMT Steel vs. The Erawan Group | TMT Steel vs. Jay Mart Public | TMT Steel vs. Airports of Thailand |
General Environmental vs. Tata Steel Public | General Environmental vs. TTCL Public | General Environmental vs. Thaifoods Group Public | General Environmental vs. TMT Steel Public |
Check out your portfolio center.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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |