Correlation Between STEEL DYNAMICS and MICRONIC MYDATA

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Can any of the company-specific risk be diversified away by investing in both STEEL DYNAMICS and MICRONIC MYDATA 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 MICRONIC MYDATA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STEEL DYNAMICS and MICRONIC MYDATA, you can compare the effects of market volatilities on STEEL DYNAMICS and MICRONIC MYDATA 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 MICRONIC MYDATA. Check out your portfolio center. Please also check ongoing floating volatility patterns of STEEL DYNAMICS and MICRONIC MYDATA.

Diversification Opportunities for STEEL DYNAMICS and MICRONIC MYDATA

-0.31
  Correlation Coefficient

Very good diversification

The 3 months correlation between STEEL and MICRONIC is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding STEEL DYNAMICS and MICRONIC MYDATA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MICRONIC MYDATA 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 MICRONIC MYDATA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MICRONIC MYDATA has no effect on the direction of STEEL DYNAMICS i.e., STEEL DYNAMICS and MICRONIC MYDATA go up and down completely randomly.

Pair Corralation between STEEL DYNAMICS and MICRONIC MYDATA

Assuming the 90 days trading horizon STEEL DYNAMICS is expected to under-perform the MICRONIC MYDATA. But the stock apears to be less risky and, when comparing its historical volatility, STEEL DYNAMICS is 1.04 times less risky than MICRONIC MYDATA. The stock trades about -0.21 of its potential returns per unit of risk. The MICRONIC MYDATA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,356  in MICRONIC MYDATA on October 30, 2024 and sell it today you would earn a total of  344.00  from holding MICRONIC MYDATA or generate 10.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

STEEL DYNAMICS  vs.  MICRONIC MYDATA

 Performance 
       Timeline  
STEEL DYNAMICS 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days STEEL DYNAMICS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, STEEL DYNAMICS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
MICRONIC MYDATA 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in MICRONIC MYDATA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, MICRONIC MYDATA is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

STEEL DYNAMICS and MICRONIC MYDATA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with STEEL DYNAMICS and MICRONIC MYDATA

The main advantage of trading using opposite STEEL DYNAMICS and MICRONIC MYDATA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STEEL DYNAMICS position performs unexpectedly, MICRONIC MYDATA 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 MICRONIC MYDATA will offset losses from the drop in MICRONIC MYDATA's long position.
The idea behind STEEL DYNAMICS and MICRONIC MYDATA 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.
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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