Correlation Between Steel Dynamics and Bangkok Expressway
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Bangkok Expressway 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 Bangkok Expressway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Bangkok Expressway and, you can compare the effects of market volatilities on Steel Dynamics and Bangkok Expressway 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 Bangkok Expressway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Bangkok Expressway.
Diversification Opportunities for Steel Dynamics and Bangkok Expressway
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Steel and Bangkok is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Bangkok Expressway and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Expressway and 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 Bangkok Expressway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Expressway and has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Bangkok Expressway go up and down completely randomly.
Pair Corralation between Steel Dynamics and Bangkok Expressway
Given the investment horizon of 90 days Steel Dynamics is expected to generate 1.48 times more return on investment than Bangkok Expressway. However, Steel Dynamics is 1.48 times more volatile than Bangkok Expressway and. It trades about 0.05 of its potential returns per unit of risk. Bangkok Expressway and is currently generating about -0.03 per unit of risk. If you would invest 10,201 in Steel Dynamics on September 12, 2024 and sell it today you would earn a total of 3,256 from holding Steel Dynamics or generate 31.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.98% |
| Values | Daily Returns |
Steel Dynamics vs. Bangkok Expressway and
Performance |
| Timeline |
| Steel Dynamics |
| Bangkok Expressway and |
Steel Dynamics and Bangkok Expressway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Bangkok Expressway
The main advantage of trading using opposite Steel Dynamics and Bangkok Expressway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Bangkok Expressway 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 Bangkok Expressway will offset losses from the drop in Bangkok Expressway'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 |
| Bangkok Expressway vs. CP ALL Public | Bangkok Expressway vs. Airports of Thailand | Bangkok Expressway vs. Central Pattana Public |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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