Correlation Between Steel Dynamics and AF2 Capital
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and AF2 Capital 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 AF2 Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and AF2 Capital Corp, you can compare the effects of market volatilities on Steel Dynamics and AF2 Capital 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 AF2 Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and AF2 Capital.
Diversification Opportunities for Steel Dynamics and AF2 Capital
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Steel and AF2 is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and AF2 Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AF2 Capital Corp 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 AF2 Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AF2 Capital Corp has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and AF2 Capital go up and down completely randomly.
Pair Corralation between Steel Dynamics and AF2 Capital
Given the investment horizon of 90 days Steel Dynamics is expected to generate 1.69 times less return on investment than AF2 Capital. But when comparing it to its historical volatility, Steel Dynamics is 4.53 times less risky than AF2 Capital. It trades about 0.06 of its potential returns per unit of risk. AF2 Capital Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 8.50 in AF2 Capital Corp on September 4, 2024 and sell it today you would lose (2.50) from holding AF2 Capital Corp or give up 29.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Steel Dynamics vs. AF2 Capital Corp
Performance |
| Timeline |
| Steel Dynamics |
| AF2 Capital Corp |
Steel Dynamics and AF2 Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and AF2 Capital
The main advantage of trading using opposite Steel Dynamics and AF2 Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, AF2 Capital 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 AF2 Capital will offset losses from the drop in AF2 Capital'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 |
| AF2 Capital vs. Goodfood Market Corp | AF2 Capital vs. Jamieson Wellness | AF2 Capital vs. Marimaca Copper Corp | AF2 Capital vs. Ramp Metals |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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