Correlation Between Steel Dynamics and Atico Mining
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Atico Mining 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 Atico Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Atico Mining, you can compare the effects of market volatilities on Steel Dynamics and Atico Mining 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 Atico Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Atico Mining.
Diversification Opportunities for Steel Dynamics and Atico Mining
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Steel and Atico is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Atico Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atico Mining 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 Atico Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atico Mining has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Atico Mining go up and down completely randomly.
Pair Corralation between Steel Dynamics and Atico Mining
Given the investment horizon of 90 days Steel Dynamics is expected to generate 0.42 times more return on investment than Atico Mining. However, Steel Dynamics is 2.36 times less risky than Atico Mining. It trades about 0.04 of its potential returns per unit of risk. Atico Mining is currently generating about -0.03 per unit of risk. If you would invest 13,163 in Steel Dynamics on September 3, 2024 and sell it today you would earn a total of 1,364 from holding Steel Dynamics or generate 10.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steel Dynamics vs. Atico Mining
Performance |
| Timeline |
| Steel Dynamics |
| Atico Mining |
Steel Dynamics and Atico Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Atico Mining
The main advantage of trading using opposite Steel Dynamics and Atico Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Atico Mining 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 Atico Mining will offset losses from the drop in Atico Mining'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 |
| Atico Mining vs. Algoma Steel Group | Atico Mining vs. Champion Iron | Atico Mining vs. International Zeolite Corp | Atico Mining vs. European Residential Real |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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