Correlation Between Steel Authority and Maithan Alloys

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

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

Diversification Opportunities for Steel Authority and Maithan Alloys

0.79

Correlation Coefficient

Steel Authority  Maithan Alloys

Poor diversification

The 3 months correlation between Steel and Maithan is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Steel Authority of and Maithan Alloys Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maithan Alloys and Steel Authority 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 Authority of are associated (or correlated) with Maithan Alloys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maithan Alloys has no effect on the direction of Steel Authority i.e., Steel Authority and Maithan Alloys go up and down completely randomly.

Pair Corralation between Steel Authority and Maithan Alloys

Assuming the 90 days trading horizon Steel Authority is expected to generate 1.56 times less return on investment than Maithan Alloys. But when comparing it to its historical volatility, Steel Authority of is 1.15 times less risky than Maithan Alloys. It trades about 0.08 of its potential returns per unit of risk. Maithan Alloys Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  93,884  in Maithan Alloys Limited on May 7, 2025 and sell it today you would earn a total of  16,026  from holding Maithan Alloys Limited or generate 17.07% return on investment over 90 days.

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

Steel Authority of  vs.  Maithan Alloys Limited

Steel Authority

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Steel Authority of are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Steel Authority may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Maithan Alloys

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Maithan Alloys Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Maithan Alloys displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Steel Authority and Maithan Alloys

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

The idea behind Steel Authority of and Maithan Alloys 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.