Correlation Between YAOKO CO and Steel Dynamics
Can any of the company-specific risk be diversified away by investing in both YAOKO CO and Steel Dynamics 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 YAOKO CO and Steel Dynamics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YAOKO LTD and Steel Dynamics, you can compare the effects of market volatilities on YAOKO CO and Steel Dynamics 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 YAOKO CO with a short position of Steel Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of YAOKO CO and Steel Dynamics.
Diversification Opportunities for YAOKO CO and Steel Dynamics
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between YAOKO and Steel is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding YAOKO LTD and Steel Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Dynamics and YAOKO CO 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 YAOKO LTD are associated (or correlated) with Steel Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Dynamics has no effect on the direction of YAOKO CO i.e., YAOKO CO and Steel Dynamics go up and down completely randomly.
Pair Corralation between YAOKO CO and Steel Dynamics
Assuming the 90 days horizon YAOKO CO is expected to generate 1.74 times less return on investment than Steel Dynamics. But when comparing it to its historical volatility, YAOKO LTD is 1.64 times less risky than Steel Dynamics. It trades about 0.04 of its potential returns per unit of risk. Steel Dynamics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 9,932 in Steel Dynamics on August 24, 2024 and sell it today you would earn a total of 3,580 from holding Steel Dynamics or generate 36.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
YAOKO LTD vs. Steel Dynamics
Performance |
| Timeline |
| YAOKO LTD |
| Steel Dynamics |
YAOKO CO and Steel Dynamics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YAOKO CO and Steel Dynamics
The main advantage of trading using opposite YAOKO CO and Steel Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YAOKO CO position performs unexpectedly, Steel Dynamics 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 Steel Dynamics will offset losses from the drop in Steel Dynamics' long position.| YAOKO CO vs. Loblaw Companies Limited | YAOKO CO vs. Superior Plus Corp | YAOKO CO vs. NMI Holdings | YAOKO CO vs. Origin Agritech |
| Steel Dynamics vs. ArcelorMittal SA | Steel Dynamics vs. ArcelorMittal | Steel Dynamics vs. Nippon Steel | Steel Dynamics vs. NIPPON STEEL SPADR |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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