Correlation Between Steel Dynamics and BankInvest Danske

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Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and BankInvest Danske 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 BankInvest Danske into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and BankInvest Danske, you can compare the effects of market volatilities on Steel Dynamics and BankInvest Danske 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 BankInvest Danske. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and BankInvest Danske.

Diversification Opportunities for Steel Dynamics and BankInvest Danske

-0.79
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Steel and BankInvest is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and BankInvest Danske in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankInvest Danske 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 BankInvest Danske. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankInvest Danske has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and BankInvest Danske go up and down completely randomly.

Pair Corralation between Steel Dynamics and BankInvest Danske

Given the investment horizon of 90 days Steel Dynamics is expected to under-perform the BankInvest Danske. In addition to that, Steel Dynamics is 1.79 times more volatile than BankInvest Danske. It trades about -0.26 of its total potential returns per unit of risk. BankInvest Danske is currently generating about 0.06 per unit of volatility. If you would invest  11,610  in BankInvest Danske on September 13, 2024 and sell it today you would earn a total of  110.00  from holding BankInvest Danske or generate 0.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

Steel Dynamics  vs.  BankInvest Danske

 Performance 
       Timeline  
Steel Dynamics 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Steel Dynamics are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, Steel Dynamics exhibited solid returns over the last few months and may actually be approaching a breakup point.
BankInvest Danske 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BankInvest Danske has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong fundamental indicators, BankInvest Danske is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Steel Dynamics and BankInvest Danske Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Steel Dynamics and BankInvest Danske

The main advantage of trading using opposite Steel Dynamics and BankInvest Danske positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, BankInvest Danske 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 BankInvest Danske will offset losses from the drop in BankInvest Danske's long position.
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The idea behind Steel Dynamics and BankInvest Danske pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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