Correlation Between Steel Dynamics and Alpha Cognition
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Alpha Cognition 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 Alpha Cognition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Alpha Cognition, you can compare the effects of market volatilities on Steel Dynamics and Alpha Cognition 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 Alpha Cognition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Alpha Cognition.
Diversification Opportunities for Steel Dynamics and Alpha Cognition
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Steel and Alpha is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Alpha Cognition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Cognition 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 Alpha Cognition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Cognition has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Alpha Cognition go up and down completely randomly.
Pair Corralation between Steel Dynamics and Alpha Cognition
Given the investment horizon of 90 days Steel Dynamics is expected to generate 64.99 times less return on investment than Alpha Cognition. But when comparing it to its historical volatility, Steel Dynamics is 39.27 times less risky than Alpha Cognition. It trades about 0.05 of its potential returns per unit of risk. Alpha Cognition is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,513 in Alpha Cognition on August 31, 2024 and sell it today you would lose (846.00) from holding Alpha Cognition or give up 55.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steel Dynamics vs. Alpha Cognition
Performance |
| Timeline |
| Steel Dynamics |
| Alpha Cognition |
Steel Dynamics and Alpha Cognition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Alpha Cognition
The main advantage of trading using opposite Steel Dynamics and Alpha Cognition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Alpha Cognition 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 Alpha Cognition will offset losses from the drop in Alpha Cognition'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 |
| Alpha Cognition vs. Rigel Pharmaceuticals | Alpha Cognition vs. Geron | Alpha Cognition vs. Verastem | Alpha Cognition vs. Immutep Ltd ADR |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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