Correlation Between Steel Dynamics and Yong Shun
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Yong Shun 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 Yong Shun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Yong Shun Chemical, you can compare the effects of market volatilities on Steel Dynamics and Yong Shun 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 Yong Shun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Yong Shun.
Diversification Opportunities for Steel Dynamics and Yong Shun
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Steel and Yong is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Yong Shun Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yong Shun Chemical 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 Yong Shun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yong Shun Chemical has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Yong Shun go up and down completely randomly.
Pair Corralation between Steel Dynamics and Yong Shun
Given the investment horizon of 90 days Steel Dynamics is expected to under-perform the Yong Shun. In addition to that, Steel Dynamics is 1.13 times more volatile than Yong Shun Chemical. It trades about -0.29 of its total potential returns per unit of risk. Yong Shun Chemical is currently generating about -0.25 per unit of volatility. If you would invest 1,720 in Yong Shun Chemical on September 12, 2024 and sell it today you would lose (120.00) from holding Yong Shun Chemical or give up 6.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Steel Dynamics vs. Yong Shun Chemical
Performance |
| Timeline |
| Steel Dynamics |
| Yong Shun Chemical |
Steel Dynamics and Yong Shun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Yong Shun
The main advantage of trading using opposite Steel Dynamics and Yong Shun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Yong Shun 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 Yong Shun will offset losses from the drop in Yong Shun'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 |
| Yong Shun vs. Tainan Spinning Co | Yong Shun vs. Lealea Enterprise Co | Yong Shun vs. China Petrochemical Development | Yong Shun vs. Ruentex Development 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 CEOs Directory module to screen CEOs from public companies around the world.
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