Correlation Between Steel Dynamics and Agfa Gevaert
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Agfa Gevaert 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 Agfa Gevaert into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Agfa Gevaert NV, you can compare the effects of market volatilities on Steel Dynamics and Agfa Gevaert 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 Agfa Gevaert. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Agfa Gevaert.
Diversification Opportunities for Steel Dynamics and Agfa Gevaert
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Steel and Agfa is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Agfa Gevaert NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agfa Gevaert NV 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 Agfa Gevaert. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agfa Gevaert NV has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Agfa Gevaert go up and down completely randomly.
Pair Corralation between Steel Dynamics and Agfa Gevaert
Given the investment horizon of 90 days Steel Dynamics is expected to generate 0.18 times more return on investment than Agfa Gevaert. However, Steel Dynamics is 5.71 times less risky than Agfa Gevaert. It trades about -0.29 of its potential returns per unit of risk. Agfa Gevaert NV is currently generating about -0.21 per unit of risk. If you would invest 14,780 in Steel Dynamics on September 12, 2024 and sell it today you would lose (1,251) from holding Steel Dynamics or give up 8.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Steel Dynamics vs. Agfa Gevaert NV
Performance |
| Timeline |
| Steel Dynamics |
| Agfa Gevaert NV |
Steel Dynamics and Agfa Gevaert Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Agfa Gevaert
The main advantage of trading using opposite Steel Dynamics and Agfa Gevaert positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Agfa Gevaert 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 Agfa Gevaert will offset losses from the drop in Agfa Gevaert'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 |
| Agfa Gevaert vs. Enerpac Tool Group | Agfa Gevaert vs. Omega Flex | Agfa Gevaert vs. Luxfer Holdings PLC | Agfa Gevaert vs. Gorman Rupp |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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