Correlation Between CSP Steel and Permsin Steel

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

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

Diversification Opportunities for CSP Steel and Permsin Steel

-0.17

Correlation Coefficient

CSP Steel  Permsin Steel

Good diversification

The 3 months correlation between CSP and Permsin is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding CSP Steel Center and Permsin Steel Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Permsin Steel Works and CSP 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 CSP Steel Center are associated (or correlated) with Permsin Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Permsin Steel Works has no effect on the direction of CSP Steel i.e., CSP Steel and Permsin Steel go up and down completely randomly.

Pair Corralation between CSP Steel and Permsin Steel

Assuming the 90 days trading horizon CSP Steel Center is expected to generate 1.4 times more return on investment than Permsin Steel. However, CSP Steel is 1.4 times more volatile than Permsin Steel Works. It trades about 0.06 of its potential returns per unit of risk. Permsin Steel Works is currently generating about -0.05 per unit of risk. If you would invest  48.00  in CSP Steel Center on April 23, 2025 and sell it today you would earn a total of  5.00  from holding CSP Steel Center or generate 10.42% return on investment over 90 days.

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

CSP Steel Center  vs.  Permsin Steel Works

CSP Steel Center

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CSP Steel Center are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, CSP Steel disclosed solid returns over the last few months and may actually be approaching a breakup point.

Permsin Steel Works

Risk-Adjusted Performance

Very Weak

Over the last 90 days Permsin Steel Works has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals 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 CSP Steel and Permsin Steel

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

The idea behind CSP Steel Center and Permsin Steel Works 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.