Correlation Between Steel Dynamics and North Chemical
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By analyzing existing cross correlation between Steel Dynamics and North Chemical Industries, you can compare the effects of market volatilities on Steel Dynamics and North Chemical 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 North Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and North Chemical.
Diversification Opportunities for Steel Dynamics and North Chemical
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Steel and North is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and North Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Chemical Industries 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 North Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Chemical Industries has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and North Chemical go up and down completely randomly.
Pair Corralation between Steel Dynamics and North Chemical
Given the investment horizon of 90 days Steel Dynamics is expected to generate 2.03 times less return on investment than North Chemical. But when comparing it to its historical volatility, Steel Dynamics is 1.91 times less risky than North Chemical. It trades about 0.06 of its potential returns per unit of risk. North Chemical Industries is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 821.00 in North Chemical Industries on September 4, 2024 and sell it today you would earn a total of 407.00 from holding North Chemical Industries or generate 49.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.95% |
| Values | Daily Returns |
Steel Dynamics vs. North Chemical Industries
Performance |
| Timeline |
| Steel Dynamics |
| North Chemical Industries |
Steel Dynamics and North Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and North Chemical
The main advantage of trading using opposite Steel Dynamics and North Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, North Chemical 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 North Chemical will offset losses from the drop in North Chemical's long position.| Steel Dynamics vs. Cleveland Cliffs | Steel Dynamics vs. United States Steel | Steel Dynamics vs. ArcelorMittal SA ADR | Steel Dynamics vs. Reliance Steel Aluminum |
| North Chemical vs. Tibet Huayu Mining | North Chemical vs. Uroica Mining Safety | North Chemical vs. China Sports Industry | North Chemical vs. Luyin Investment Group |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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