Correlation Between Steel Dynamics and Bin Chuan
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Bin Chuan 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 Bin Chuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Bin Chuan Enterprise, you can compare the effects of market volatilities on Steel Dynamics and Bin Chuan 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 Bin Chuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Bin Chuan.
Diversification Opportunities for Steel Dynamics and Bin Chuan
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Steel and Bin is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Bin Chuan Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bin Chuan Enterprise 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 Bin Chuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bin Chuan Enterprise has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Bin Chuan go up and down completely randomly.
Pair Corralation between Steel Dynamics and Bin Chuan
Given the investment horizon of 90 days Steel Dynamics is expected to generate 6.19 times less return on investment than Bin Chuan. But when comparing it to its historical volatility, Steel Dynamics is 1.22 times less risky than Bin Chuan. It trades about 0.11 of its potential returns per unit of risk. Bin Chuan Enterprise is currently generating about 0.57 of returns per unit of risk over similar time horizon. If you would invest 3,930 in Bin Chuan Enterprise on September 4, 2024 and sell it today you would earn a total of 2,550 from holding Bin Chuan Enterprise or generate 64.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Steel Dynamics vs. Bin Chuan Enterprise
Performance |
| Timeline |
| Steel Dynamics |
| Bin Chuan Enterprise |
Steel Dynamics and Bin Chuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Bin Chuan
The main advantage of trading using opposite Steel Dynamics and Bin Chuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Bin Chuan 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 Bin Chuan will offset losses from the drop in Bin Chuan'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 |
| Bin Chuan vs. Holtek Semiconductor | Bin Chuan vs. Orient Semiconductor Electronics | Bin Chuan vs. Davicom Semiconductor | Bin Chuan vs. Taiwan Semiconductor Co |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |