Correlation Between Steel Dynamics and Fineotex Chemical
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Fineotex Chemical 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 Fineotex Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Fineotex Chemical Limited, you can compare the effects of market volatilities on Steel Dynamics and Fineotex Chemical 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 Fineotex Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Fineotex Chemical.
Diversification Opportunities for Steel Dynamics and Fineotex Chemical
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Steel and Fineotex is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Fineotex Chemical Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fineotex Chemical 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 Fineotex Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fineotex Chemical has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Fineotex Chemical go up and down completely randomly.
Pair Corralation between Steel Dynamics and Fineotex Chemical
Given the investment horizon of 90 days Steel Dynamics is expected to generate 0.9 times more return on investment than Fineotex Chemical. However, Steel Dynamics is 1.11 times less risky than Fineotex Chemical. It trades about 0.04 of its potential returns per unit of risk. Fineotex Chemical Limited is currently generating about 0.0 per unit of risk. If you would invest 13,163 in Steel Dynamics on September 3, 2024 and sell it today you would earn a total of 1,364 from holding Steel Dynamics or generate 10.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steel Dynamics vs. Fineotex Chemical Limited
Performance |
| Timeline |
| Steel Dynamics |
| Fineotex Chemical |
Steel Dynamics and Fineotex Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Fineotex Chemical
The main advantage of trading using opposite Steel Dynamics and Fineotex Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Fineotex Chemical 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 Fineotex Chemical will offset losses from the drop in Fineotex Chemical'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 |
| Fineotex Chemical vs. Blue Coast Hotels | Fineotex Chemical vs. Samhi Hotels Limited | Fineotex Chemical vs. Manaksia Coated Metals | Fineotex Chemical vs. Asian Hotels Limited |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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