Correlation Between Steel Dynamics and Acroud AB
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Acroud AB 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 Acroud AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Acroud AB, you can compare the effects of market volatilities on Steel Dynamics and Acroud AB 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 Acroud AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Acroud AB.
Diversification Opportunities for Steel Dynamics and Acroud AB
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Steel and Acroud is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Acroud AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acroud AB 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 Acroud AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acroud AB has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Acroud AB go up and down completely randomly.
Pair Corralation between Steel Dynamics and Acroud AB
Given the investment horizon of 90 days Steel Dynamics is expected to generate 0.78 times more return on investment than Acroud AB. However, Steel Dynamics is 1.29 times less risky than Acroud AB. It trades about 0.12 of its potential returns per unit of risk. Acroud AB is currently generating about -0.19 per unit of risk. If you would invest 12,754 in Steel Dynamics on September 3, 2024 and sell it today you would earn a total of 1,773 from holding Steel Dynamics or generate 13.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Steel Dynamics vs. Acroud AB
Performance |
| Timeline |
| Steel Dynamics |
| Acroud AB |
Steel Dynamics and Acroud AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Acroud AB
The main advantage of trading using opposite Steel Dynamics and Acroud AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Acroud AB 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 Acroud AB will offset losses from the drop in Acroud AB'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 |
| Acroud AB vs. Kambi Group PLC | Acroud AB vs. Betsson AB | Acroud AB vs. Evolution AB | Acroud AB vs. Embracer Group AB |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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