Correlation Between Steel Dynamics and C PARAN
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and C PARAN 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 C PARAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and C PARAN EN, you can compare the effects of market volatilities on Steel Dynamics and C PARAN 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 C PARAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and C PARAN.
Diversification Opportunities for Steel Dynamics and C PARAN
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Steel and ELP1 is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and C PARAN EN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C PARAN EN 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 C PARAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C PARAN EN has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and C PARAN go up and down completely randomly.
Pair Corralation between Steel Dynamics and C PARAN
Given the investment horizon of 90 days Steel Dynamics is expected to under-perform the C PARAN. But the stock apears to be less risky and, when comparing its historical volatility, Steel Dynamics is 1.7 times less risky than C PARAN. The stock trades about -0.26 of its potential returns per unit of risk. The C PARAN EN is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 580.00 in C PARAN EN on September 13, 2024 and sell it today you would lose (15.00) from holding C PARAN EN or give up 2.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Steel Dynamics vs. C PARAN EN
Performance |
| Timeline |
| Steel Dynamics |
| C PARAN EN |
Steel Dynamics and C PARAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and C PARAN
The main advantage of trading using opposite Steel Dynamics and C PARAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, C PARAN 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 C PARAN will offset losses from the drop in C PARAN'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 |
| C PARAN vs. SSE PLC ADR | C PARAN vs. CIA ENGER ADR | C PARAN vs. Companhia Energtica de | C PARAN vs. EVN AG |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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