Correlation Between Aperam PK and Salzgitter
Can any of the company-specific risk be diversified away by investing in both Aperam PK 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 Aperam PK and Salzgitter into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aperam PK and Salzgitter AG ADR, you can compare the effects of market volatilities on Aperam PK 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 Aperam PK with a short position of Salzgitter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aperam PK and Salzgitter.
Diversification Opportunities for Aperam PK and Salzgitter
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Aperam and Salzgitter is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Aperam PK 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 Aperam PK 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 Aperam PK 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 Aperam PK i.e., Aperam PK and Salzgitter go up and down completely randomly.
Pair Corralation between Aperam PK and Salzgitter
Assuming the 90 days horizon Aperam PK is expected to generate 4.03 times less return on investment than Salzgitter. But when comparing it to its historical volatility, Aperam PK is 3.41 times less risky than Salzgitter. It trades about 0.12 of its potential returns per unit of risk. Salzgitter AG ADR is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 150.00 in Salzgitter AG ADR on September 2, 2024 and sell it today you would earn a total of 27.00 from holding Salzgitter AG ADR or generate 18.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Aperam PK vs. Salzgitter AG ADR
Performance |
| Timeline |
| Aperam PK |
| Salzgitter AG ADR |
Aperam PK and Salzgitter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aperam PK and Salzgitter
The main advantage of trading using opposite Aperam PK and Salzgitter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aperam PK 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.| Aperam PK vs. ArcelorMittal SA | Aperam PK vs. Algoma Steel Group | Aperam PK vs. Kumba Iron Ore | Aperam PK vs. Synalloy |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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