Correlation Between Steel Dynamics and Coloplast
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Coloplast 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 Coloplast into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Coloplast AS, you can compare the effects of market volatilities on Steel Dynamics and Coloplast 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 Coloplast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Coloplast.
Diversification Opportunities for Steel Dynamics and Coloplast
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Steel and Coloplast is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Coloplast AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coloplast AS 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 Coloplast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coloplast AS has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Coloplast go up and down completely randomly.
Pair Corralation between Steel Dynamics and Coloplast
Given the investment horizon of 90 days Steel Dynamics is expected to generate 0.78 times more return on investment than Coloplast. However, Steel Dynamics is 1.28 times less risky than Coloplast. It trades about 0.06 of its potential returns per unit of risk. Coloplast AS is currently generating about 0.02 per unit of risk. If you would invest 9,818 in Steel Dynamics on August 31, 2024 and sell it today you would earn a total of 4,709 from holding Steel Dynamics or generate 47.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 67.65% |
| Values | Daily Returns |
Steel Dynamics vs. Coloplast AS
Performance |
| Timeline |
| Steel Dynamics |
| Coloplast AS |
Steel Dynamics and Coloplast Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Coloplast
The main advantage of trading using opposite Steel Dynamics and Coloplast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Coloplast 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 Coloplast will offset losses from the drop in Coloplast'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 |
| Coloplast vs. Sysmex Corp | Coloplast vs. Straumann Holding AG | Coloplast vs. Essilor International SA | Coloplast vs. EssilorLuxottica Socit anonyme |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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