Correlation Between Steel Dynamics and Moment Group
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Moment Group 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 Moment Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Moment Group AB, you can compare the effects of market volatilities on Steel Dynamics and Moment Group 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 Moment Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Moment Group.
Diversification Opportunities for Steel Dynamics and Moment Group
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Steel and Moment is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Moment Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moment Group AB 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 Moment Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moment Group AB has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Moment Group go up and down completely randomly.
Pair Corralation between Steel Dynamics and Moment Group
Given the investment horizon of 90 days Steel Dynamics is expected to generate 1.26 times less return on investment than Moment Group. But when comparing it to its historical volatility, Steel Dynamics is 2.01 times less risky than Moment Group. It trades about 0.14 of its potential returns per unit of risk. Moment Group AB is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 830.00 in Moment Group AB on September 12, 2024 and sell it today you would earn a total of 185.00 from holding Moment Group AB or generate 22.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Steel Dynamics vs. Moment Group AB
Performance |
| Timeline |
| Steel Dynamics |
| Moment Group AB |
Steel Dynamics and Moment Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Moment Group
The main advantage of trading using opposite Steel Dynamics and Moment Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Moment Group 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 Moment Group will offset losses from the drop in Moment Group'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 |
| Moment Group vs. Karolinska Development AB | Moment Group vs. Oncopeptides AB | Moment Group vs. Episurf Medical AB |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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