Correlation Between Steel Dynamics and Adacel Tech
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Adacel Tech 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 Adacel Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Adacel Tech, you can compare the effects of market volatilities on Steel Dynamics and Adacel Tech 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 Adacel Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Adacel Tech.
Diversification Opportunities for Steel Dynamics and Adacel Tech
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Steel and Adacel is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Adacel Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adacel Tech 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 Adacel Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adacel Tech has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Adacel Tech go up and down completely randomly.
Pair Corralation between Steel Dynamics and Adacel Tech
Given the investment horizon of 90 days Steel Dynamics is expected to generate 0.49 times more return on investment than Adacel Tech. However, Steel Dynamics is 2.05 times less risky than Adacel Tech. It trades about 0.06 of its potential returns per unit of risk. Adacel Tech is currently generating about -0.05 per unit of risk. If you would invest 12,460 in Steel Dynamics on September 5, 2024 and sell it today you would earn a total of 1,860 from holding Steel Dynamics or generate 14.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.66% |
| Values | Daily Returns |
Steel Dynamics vs. Adacel Tech
Performance |
| Timeline |
| Steel Dynamics |
| Adacel Tech |
Steel Dynamics and Adacel Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Adacel Tech
The main advantage of trading using opposite Steel Dynamics and Adacel Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Adacel Tech 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 Adacel Tech will offset losses from the drop in Adacel Tech'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 |
| Adacel Tech vs. Aneka Tambang Tbk | Adacel Tech vs. BHP Group Limited | Adacel Tech vs. Commonwealth Bank of | Adacel Tech vs. Commonwealth Bank of |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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