Correlation Between Steel Dynamics and C PARAN

Specify exactly 2 symbols:
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 Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

Steel Dynamics  vs.  C PARAN EN

 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.
C PARAN EN 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days C PARAN EN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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.
The idea behind Steel Dynamics and C PARAN EN 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.
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..

Other Complementary Tools

Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
USA ETFs
Find actively traded Exchange Traded Funds (ETF) in USA