Correlation Between Nucor and PT Steel
Can any of the company-specific risk be diversified away by investing in both Nucor and PT Steel 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 Nucor and PT Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nucor and PT Steel Pipe, you can compare the effects of market volatilities on Nucor and PT Steel 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 Nucor with a short position of PT Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nucor and PT Steel.
Diversification Opportunities for Nucor and PT Steel
Very good diversification
The 3 months correlation between Nucor and S08 is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Nucor and PT Steel Pipe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Steel Pipe and Nucor 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 Nucor are associated (or correlated) with PT Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Steel Pipe has no effect on the direction of Nucor i.e., Nucor and PT Steel go up and down completely randomly.
Pair Corralation between Nucor and PT Steel
Assuming the 90 days horizon Nucor is expected to under-perform the PT Steel. But the stock apears to be less risky and, when comparing its historical volatility, Nucor is 3.25 times less risky than PT Steel. The stock trades about 0.0 of its potential returns per unit of risk. The PT Steel Pipe is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1.35 in PT Steel Pipe on September 14, 2024 and sell it today you would lose (0.10) from holding PT Steel Pipe or give up 7.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.64% |
| Values | Daily Returns |
Nucor vs. PT Steel Pipe
Performance |
| Timeline |
| Nucor |
| PT Steel Pipe |
Nucor and PT Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nucor and PT Steel
The main advantage of trading using opposite Nucor and PT Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nucor position performs unexpectedly, PT Steel 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 PT Steel will offset losses from the drop in PT Steel's long position.| Nucor vs. ArcelorMittal | Nucor vs. NIPPON STEEL SPADR | Nucor vs. Reliance Steel Aluminum | Nucor vs. Superior Plus Corp |
| PT Steel vs. CVW CLEANTECH INC | PT Steel vs. Automatic Data Processing | PT Steel vs. CVR Medical Corp | PT Steel vs. DATANG INTL POW |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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