Correlation Between Steel Dynamics and HYBE
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and HYBE 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 HYBE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and HYBE Co, you can compare the effects of market volatilities on Steel Dynamics and HYBE 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 HYBE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and HYBE.
Diversification Opportunities for Steel Dynamics and HYBE
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Steel and HYBE is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and HYBE Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYBE 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 HYBE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYBE has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and HYBE go up and down completely randomly.
Pair Corralation between Steel Dynamics and HYBE
Given the investment horizon of 90 days Steel Dynamics is expected to generate 0.82 times more return on investment than HYBE. However, Steel Dynamics is 1.23 times less risky than HYBE. It trades about 0.04 of its potential returns per unit of risk. HYBE Co is currently generating about 0.03 per unit of risk. If you would invest 10,719 in Steel Dynamics on September 3, 2024 and sell it today you would earn a total of 3,808 from holding Steel Dynamics or generate 35.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.58% |
| Values | Daily Returns |
Steel Dynamics vs. HYBE Co
Performance |
| Timeline |
| Steel Dynamics |
| HYBE |
Steel Dynamics and HYBE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and HYBE
The main advantage of trading using opposite Steel Dynamics and HYBE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, HYBE 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 HYBE will offset losses from the drop in HYBE'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 |
| HYBE vs. Miwon Chemical | HYBE vs. Hyundai Industrial Co | HYBE vs. LG Chemicals | HYBE vs. Youl Chon Chemical |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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