Correlation Between Acerinox and Salzgitter
Can any of the company-specific risk be diversified away by investing in both Acerinox and Salzgitter 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 Acerinox and Salzgitter into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acerinox SA ADR and Salzgitter AG ADR, you can compare the effects of market volatilities on Acerinox and Salzgitter 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 Acerinox with a short position of Salzgitter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acerinox and Salzgitter.
Diversification Opportunities for Acerinox and Salzgitter
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Acerinox and Salzgitter is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Acerinox SA ADR and Salzgitter AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salzgitter AG ADR and Acerinox 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 Acerinox SA ADR are associated (or correlated) with Salzgitter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salzgitter AG ADR has no effect on the direction of Acerinox i.e., Acerinox and Salzgitter go up and down completely randomly.
Pair Corralation between Acerinox and Salzgitter
Assuming the 90 days horizon Acerinox SA ADR is expected to generate 0.99 times more return on investment than Salzgitter. However, Acerinox SA ADR is 1.01 times less risky than Salzgitter. It trades about 0.02 of its potential returns per unit of risk. Salzgitter AG ADR is currently generating about -0.02 per unit of risk. If you would invest 488.00 in Acerinox SA ADR on September 2, 2024 and sell it today you would earn a total of 12.00 from holding Acerinox SA ADR or generate 2.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.95% |
| Values | Daily Returns |
Acerinox SA ADR vs. Salzgitter AG ADR
Performance |
| Timeline |
| Acerinox SA ADR |
| Salzgitter AG ADR |
Acerinox and Salzgitter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acerinox and Salzgitter
The main advantage of trading using opposite Acerinox and Salzgitter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acerinox position performs unexpectedly, Salzgitter 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 Salzgitter will offset losses from the drop in Salzgitter's long position.| Acerinox vs. ArcelorMittal SA | Acerinox vs. Algoma Steel Group | Acerinox vs. Synalloy | Acerinox vs. Algoma Steel Group |
| Salzgitter vs. Olympic Steel | Salzgitter vs. POSCO Holdings | Salzgitter vs. Steel Dynamics | Salzgitter vs. Universal Stainless Alloy |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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