Correlation Between TT Electronics and STEEL DYNAMICS
Can any of the company-specific risk be diversified away by investing in both TT Electronics 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 TT Electronics and STEEL DYNAMICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TT Electronics PLC and STEEL DYNAMICS, you can compare the effects of market volatilities on TT Electronics 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 TT Electronics with a short position of STEEL DYNAMICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of TT Electronics and STEEL DYNAMICS.
Diversification Opportunities for TT Electronics and STEEL DYNAMICS
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between 7TT and STEEL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TT Electronics PLC and STEEL DYNAMICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STEEL DYNAMICS and TT Electronics 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 TT Electronics PLC 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 TT Electronics i.e., TT Electronics and STEEL DYNAMICS go up and down completely randomly.
Pair Corralation between TT Electronics and STEEL DYNAMICS
Assuming the 90 days trading horizon TT Electronics PLC is expected to under-perform the STEEL DYNAMICS. In addition to that, TT Electronics is 1.13 times more volatile than STEEL DYNAMICS. It trades about -0.34 of its total potential returns per unit of risk. STEEL DYNAMICS is currently generating about -0.21 per unit of volatility. If you would invest 13,509 in STEEL DYNAMICS on October 30, 2024 and sell it today you would lose (1,893) from holding STEEL DYNAMICS or give up 14.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TT Electronics PLC vs. STEEL DYNAMICS
Performance |
| Timeline |
| TT Electronics PLC |
| STEEL DYNAMICS |
TT Electronics and STEEL DYNAMICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TT Electronics and STEEL DYNAMICS
The main advantage of trading using opposite TT Electronics and STEEL DYNAMICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TT Electronics 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's long position.| TT Electronics vs. Genertec Universal Medical | TT Electronics vs. Inspire Medical Systems | TT Electronics vs. DXC Technology Co | TT Electronics vs. Peijia Medical Limited |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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