Correlation Between STEEL DYNAMICS and China Resources
Can any of the company-specific risk be diversified away by investing in both STEEL DYNAMICS and China Resources 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 STEEL DYNAMICS and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STEEL DYNAMICS and China Resources Beer, you can compare the effects of market volatilities on STEEL DYNAMICS and China Resources 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 STEEL DYNAMICS with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of STEEL DYNAMICS and China Resources.
Diversification Opportunities for STEEL DYNAMICS and China Resources
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between STEEL and China is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding STEEL DYNAMICS and China Resources Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Beer and STEEL DYNAMICS 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 STEEL DYNAMICS are associated (or correlated) with China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Beer has no effect on the direction of STEEL DYNAMICS i.e., STEEL DYNAMICS and China Resources go up and down completely randomly.
Pair Corralation between STEEL DYNAMICS and China Resources
Assuming the 90 days trading horizon STEEL DYNAMICS is expected to generate 0.69 times more return on investment than China Resources. However, STEEL DYNAMICS is 1.44 times less risky than China Resources. It trades about 0.03 of its potential returns per unit of risk. China Resources Beer is currently generating about -0.02 per unit of risk. If you would invest 9,559 in STEEL DYNAMICS on October 11, 2024 and sell it today you would earn a total of 1,973 from holding STEEL DYNAMICS or generate 20.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STEEL DYNAMICS vs. China Resources Beer
Performance |
| Timeline |
| STEEL DYNAMICS |
| China Resources Beer |
STEEL DYNAMICS and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STEEL DYNAMICS and China Resources
The main advantage of trading using opposite STEEL DYNAMICS and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STEEL DYNAMICS position performs unexpectedly, China Resources 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 China Resources will offset losses from the drop in China Resources' long position.| STEEL DYNAMICS vs. China Resources Beer | STEEL DYNAMICS vs. Titan Machinery | STEEL DYNAMICS vs. FARM 51 GROUP | STEEL DYNAMICS vs. Federal Agricultural Mortgage |
| China Resources vs. Tower Semiconductor | China Resources vs. Playmates Toys Limited | China Resources vs. ULTRA CLEAN HLDGS | China Resources vs. ePlay Digital |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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