Correlation Between Steel Dynamics and Southern Copper
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Southern Copper 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 Southern Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Southern Copper, you can compare the effects of market volatilities on Steel Dynamics and Southern Copper 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 Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Southern Copper.
Diversification Opportunities for Steel Dynamics and Southern Copper
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Steel and Southern is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Southern Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper 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 Southern Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Copper has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Southern Copper go up and down completely randomly.
Pair Corralation between Steel Dynamics and Southern Copper
If you would invest 303,067 in Steel Dynamics on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Steel Dynamics or generate 0.0% 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. Southern Copper
Performance |
| Timeline |
| Steel Dynamics |
| Southern Copper |
Steel Dynamics and Southern Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Southern Copper
The main advantage of trading using opposite Steel Dynamics and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Southern Copper 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 Southern Copper will offset losses from the drop in Southern Copper's long position.| Steel Dynamics vs. United States Steel | Steel Dynamics vs. Companhia Siderrgica Nacional | Steel Dynamics vs. The Select Sector | Steel Dynamics vs. Promotora y Operadora |
| Southern Copper vs. The Select Sector | Southern Copper vs. Promotora y Operadora | Southern Copper vs. iShares Global Timber | Southern Copper vs. SPDR Series Trust |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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