Correlation Between Steel Dynamics and Seojin Automotive
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Seojin Automotive 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 Seojin Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Seojin Automotive CoLtd, you can compare the effects of market volatilities on Steel Dynamics and Seojin Automotive 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 Seojin Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Seojin Automotive.
Diversification Opportunities for Steel Dynamics and Seojin Automotive
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Steel and Seojin is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Seojin Automotive CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seojin Automotive CoLtd 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 Seojin Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seojin Automotive CoLtd has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Seojin Automotive go up and down completely randomly.
Pair Corralation between Steel Dynamics and Seojin Automotive
Given the investment horizon of 90 days Steel Dynamics is expected to generate 1.8 times more return on investment than Seojin Automotive. However, Steel Dynamics is 1.8 times more volatile than Seojin Automotive CoLtd. It trades about 0.14 of its potential returns per unit of risk. Seojin Automotive CoLtd is currently generating about -0.35 per unit of risk. If you would invest 13,358 in Steel Dynamics on September 3, 2024 and sell it today you would earn a total of 1,169 from holding Steel Dynamics or generate 8.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Steel Dynamics vs. Seojin Automotive CoLtd
Performance |
| Timeline |
| Steel Dynamics |
| Seojin Automotive CoLtd |
Steel Dynamics and Seojin Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Seojin Automotive
The main advantage of trading using opposite Steel Dynamics and Seojin Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Seojin Automotive 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 Seojin Automotive will offset losses from the drop in Seojin Automotive'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 |
| Seojin Automotive vs. Korea Real Estate | Seojin Automotive vs. Busan Industrial Co | Seojin Automotive vs. UNISEM Co | Seojin Automotive vs. RPBio Inc |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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