Correlation Between Steel Dynamics and Bim Birlesik
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Bim Birlesik 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 Bim Birlesik into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Bim Birlesik Magazalar, you can compare the effects of market volatilities on Steel Dynamics and Bim Birlesik 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 Bim Birlesik. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Bim Birlesik.
Diversification Opportunities for Steel Dynamics and Bim Birlesik
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Steel and Bim is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Bim Birlesik Magazalar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bim Birlesik Magazalar 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 Bim Birlesik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bim Birlesik Magazalar has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Bim Birlesik go up and down completely randomly.
Pair Corralation between Steel Dynamics and Bim Birlesik
Given the investment horizon of 90 days Steel Dynamics is expected to generate 5.8 times less return on investment than Bim Birlesik. But when comparing it to its historical volatility, Steel Dynamics is 2.14 times less risky than Bim Birlesik. It trades about 0.04 of its potential returns per unit of risk. Bim Birlesik Magazalar is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 123.00 in Bim Birlesik Magazalar on August 27, 2024 and sell it today you would earn a total of 857.00 from holding Bim Birlesik Magazalar or generate 696.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steel Dynamics vs. Bim Birlesik Magazalar
Performance |
| Timeline |
| Steel Dynamics |
| Bim Birlesik Magazalar |
Steel Dynamics and Bim Birlesik Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Bim Birlesik
The main advantage of trading using opposite Steel Dynamics and Bim Birlesik positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Bim Birlesik 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 Bim Birlesik will offset losses from the drop in Bim Birlesik's long position.The idea behind Steel Dynamics and Bim Birlesik Magazalar 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.| Bim Birlesik vs. Itron Inc | Bim Birlesik vs. Omega Healthcare Investors | Bim Birlesik vs. Blacksky Technology | Bim Birlesik vs. Red Cat Holdings |
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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