Correlation Between Allegheny Technologies and Thyssenkrupp
Can any of the company-specific risk be diversified away by investing in both Allegheny Technologies and Thyssenkrupp 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 Allegheny Technologies and Thyssenkrupp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allegheny Technologies Incorporated and thyssenkrupp AG, you can compare the effects of market volatilities on Allegheny Technologies and Thyssenkrupp 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 Allegheny Technologies with a short position of Thyssenkrupp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegheny Technologies and Thyssenkrupp.
Diversification Opportunities for Allegheny Technologies and Thyssenkrupp
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Allegheny and Thyssenkrupp is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo and thyssenkrupp AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on thyssenkrupp AG and Allegheny Technologies 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 Allegheny Technologies Incorporated are associated (or correlated) with Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of thyssenkrupp AG has no effect on the direction of Allegheny Technologies i.e., Allegheny Technologies and Thyssenkrupp go up and down completely randomly.
Pair Corralation between Allegheny Technologies and Thyssenkrupp
Assuming the 90 days horizon Allegheny Technologies Incorporated is expected to generate 0.57 times more return on investment than Thyssenkrupp. However, Allegheny Technologies Incorporated is 1.77 times less risky than Thyssenkrupp. It trades about -0.06 of its potential returns per unit of risk. thyssenkrupp AG is currently generating about -0.31 per unit of risk. If you would invest 5,382 in Allegheny Technologies Incorporated on October 13, 2024 and sell it today you would lose (60.00) from holding Allegheny Technologies Incorporated or give up 1.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allegheny Technologies Incorpo vs. thyssenkrupp AG
Performance |
| Timeline |
| Allegheny Technologies |
| thyssenkrupp AG |
Allegheny Technologies and Thyssenkrupp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allegheny Technologies and Thyssenkrupp
The main advantage of trading using opposite Allegheny Technologies and Thyssenkrupp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegheny Technologies position performs unexpectedly, Thyssenkrupp 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 Thyssenkrupp will offset losses from the drop in Thyssenkrupp's long position.| Allegheny Technologies vs. Superior Plus Corp | Allegheny Technologies vs. NMI Holdings | Allegheny Technologies vs. SIVERS SEMICONDUCTORS AB | Allegheny Technologies vs. Talanx AG |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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