Correlation Between Steel Dynamics and Gemina Laboratories
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Gemina Laboratories 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 Gemina Laboratories into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Gemina Laboratories, you can compare the effects of market volatilities on Steel Dynamics and Gemina Laboratories 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 Gemina Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Gemina Laboratories.
Diversification Opportunities for Steel Dynamics and Gemina Laboratories
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Steel and Gemina is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Gemina Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gemina Laboratories 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 Gemina Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gemina Laboratories has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Gemina Laboratories go up and down completely randomly.
Pair Corralation between Steel Dynamics and Gemina Laboratories
Given the investment horizon of 90 days Steel Dynamics is expected to generate 3.18 times less return on investment than Gemina Laboratories. But when comparing it to its historical volatility, Steel Dynamics is 2.83 times less risky than Gemina Laboratories. It trades about 0.14 of its potential returns per unit of risk. Gemina Laboratories is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 31.00 in Gemina Laboratories on September 12, 2024 and sell it today you would earn a total of 24.00 from holding Gemina Laboratories or generate 77.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Steel Dynamics vs. Gemina Laboratories
Performance |
| Timeline |
| Steel Dynamics |
| Gemina Laboratories |
Steel Dynamics and Gemina Laboratories Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Gemina Laboratories
The main advantage of trading using opposite Steel Dynamics and Gemina Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Gemina Laboratories 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 Gemina Laboratories will offset losses from the drop in Gemina Laboratories' 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 |
| Gemina Laboratories vs. Sino Biopharmaceutical Ltd | Gemina Laboratories vs. Defence Therapeutics | Gemina Laboratories vs. Aileron Therapeutics | Gemina Laboratories vs. Enlivex Therapeutics |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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