Correlation Between Astar and STEEL DYNAMICS
Can any of the company-specific risk be diversified away by investing in both Astar 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 Astar and STEEL DYNAMICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and STEEL DYNAMICS, you can compare the effects of market volatilities on Astar 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 Astar with a short position of STEEL DYNAMICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and STEEL DYNAMICS.
Diversification Opportunities for Astar and STEEL DYNAMICS
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Astar and STEEL is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Astar and STEEL DYNAMICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STEEL DYNAMICS and Astar 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 Astar 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 Astar i.e., Astar and STEEL DYNAMICS go up and down completely randomly.
Pair Corralation between Astar and STEEL DYNAMICS
Assuming the 90 days trading horizon Astar is expected to under-perform the STEEL DYNAMICS. In addition to that, Astar is 2.69 times more volatile than STEEL DYNAMICS. It trades about -0.16 of its total potential returns per unit of risk. STEEL DYNAMICS is currently generating about -0.29 per unit of volatility. If you would invest 12,734 in STEEL DYNAMICS on October 11, 2024 and sell it today you would lose (1,202) from holding STEEL DYNAMICS or give up 9.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 80.95% |
| Values | Daily Returns |
Astar vs. STEEL DYNAMICS
Performance |
| Timeline |
| Astar |
| STEEL DYNAMICS |
Astar and STEEL DYNAMICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astar and STEEL DYNAMICS
The main advantage of trading using opposite Astar and STEEL DYNAMICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar 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.The idea behind Astar and STEEL DYNAMICS 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.| STEEL DYNAMICS vs. China Resources Beer | STEEL DYNAMICS vs. Titan Machinery | STEEL DYNAMICS vs. FARM 51 GROUP | STEEL DYNAMICS vs. Federal Agricultural Mortgage |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |