Correlation Between Sony Group and Steel Dynamics
Can any of the company-specific risk be diversified away by investing in both Sony Group and Steel Dynamics 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 Sony Group and Steel Dynamics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sony Group Corp and Steel Dynamics, you can compare the effects of market volatilities on Sony Group and Steel Dynamics 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 Sony Group with a short position of Steel Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sony Group and Steel Dynamics.
Diversification Opportunities for Sony Group and Steel Dynamics
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sony and Steel is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Sony Group Corp and Steel Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Dynamics and Sony Group 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 Sony Group Corp are associated (or correlated) with Steel Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Dynamics has no effect on the direction of Sony Group i.e., Sony Group and Steel Dynamics go up and down completely randomly.
Pair Corralation between Sony Group and Steel Dynamics
Assuming the 90 days trading horizon Sony Group Corp is expected to generate 0.74 times more return on investment than Steel Dynamics. However, Sony Group Corp is 1.35 times less risky than Steel Dynamics. It trades about 0.26 of its potential returns per unit of risk. Steel Dynamics is currently generating about 0.14 per unit of risk. If you would invest 1,660 in Sony Group Corp on August 31, 2024 and sell it today you would earn a total of 228.00 from holding Sony Group Corp or generate 13.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sony Group Corp vs. Steel Dynamics
Performance |
| Timeline |
| Sony Group Corp |
| Steel Dynamics |
Sony Group and Steel Dynamics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sony Group and Steel Dynamics
The main advantage of trading using opposite Sony Group and Steel Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sony Group position performs unexpectedly, Steel Dynamics 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 Steel Dynamics will offset losses from the drop in Steel Dynamics' long position.| Sony Group vs. Apple Inc | Sony Group vs. Apple Inc | Sony Group vs. Samsung Electronics Co | Sony Group vs. Samsung Electronics Co |
| Steel Dynamics vs. AUTO TRADER ADR | Steel Dynamics vs. SIDETRADE EO 1 | Steel Dynamics vs. Tradeweb Markets | Steel Dynamics vs. ON SEMICONDUCTOR |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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