Correlation Between SSE PLC and Schnitzer Steel
Can any of the company-specific risk be diversified away by investing in both SSE PLC and Schnitzer 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 SSE PLC and Schnitzer Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SSE PLC ADR and Schnitzer Steel Industries, you can compare the effects of market volatilities on SSE PLC and Schnitzer 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 SSE PLC with a short position of Schnitzer Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSE PLC and Schnitzer Steel.
Diversification Opportunities for SSE PLC and Schnitzer Steel
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SSE and Schnitzer is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding SSE PLC ADR and Schnitzer Steel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schnitzer Steel Indu and SSE PLC 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 SSE PLC ADR are associated (or correlated) with Schnitzer Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schnitzer Steel Indu has no effect on the direction of SSE PLC i.e., SSE PLC and Schnitzer Steel go up and down completely randomly.
Pair Corralation between SSE PLC and Schnitzer Steel
Assuming the 90 days trading horizon SSE PLC ADR is expected to generate 0.23 times more return on investment than Schnitzer Steel. However, SSE PLC ADR is 4.35 times less risky than Schnitzer Steel. It trades about 0.0 of its potential returns per unit of risk. Schnitzer Steel Industries is currently generating about -0.13 per unit of risk. If you would invest 1,883 in SSE PLC ADR on October 25, 2024 and sell it today you would lose (3.00) from holding SSE PLC ADR or give up 0.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SSE PLC ADR vs. Schnitzer Steel Industries
Performance |
| Timeline |
| SSE PLC ADR |
| Schnitzer Steel Indu |
SSE PLC and Schnitzer Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SSE PLC and Schnitzer Steel
The main advantage of trading using opposite SSE PLC and Schnitzer Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSE PLC position performs unexpectedly, Schnitzer 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 Schnitzer Steel will offset losses from the drop in Schnitzer Steel's long position.| SSE PLC vs. INTER CARS SA | SSE PLC vs. Zijin Mining Group | SSE PLC vs. Cars Inc | SSE PLC vs. ARDAGH METAL PACDL 0001 |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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