Correlation Between Steel Dynamics and Salmon Evolution
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Salmon Evolution 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 Salmon Evolution into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Salmon Evolution Holding, you can compare the effects of market volatilities on Steel Dynamics and Salmon Evolution 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 Salmon Evolution. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Salmon Evolution.
Diversification Opportunities for Steel Dynamics and Salmon Evolution
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Steel and Salmon is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Salmon Evolution Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salmon Evolution Holding 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 Salmon Evolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salmon Evolution Holding has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Salmon Evolution go up and down completely randomly.
Pair Corralation between Steel Dynamics and Salmon Evolution
Given the investment horizon of 90 days Steel Dynamics is expected to generate 1.13 times more return on investment than Salmon Evolution. However, Steel Dynamics is 1.13 times more volatile than Salmon Evolution Holding. It trades about 0.05 of its potential returns per unit of risk. Salmon Evolution Holding is currently generating about 0.01 per unit of risk. If you would invest 10,201 in Steel Dynamics on September 12, 2024 and sell it today you would earn a total of 3,256 from holding Steel Dynamics or generate 31.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.7% |
| Values | Daily Returns |
Steel Dynamics vs. Salmon Evolution Holding
Performance |
| Timeline |
| Steel Dynamics |
| Salmon Evolution Holding |
Steel Dynamics and Salmon Evolution Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Salmon Evolution
The main advantage of trading using opposite Steel Dynamics and Salmon Evolution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Salmon Evolution 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 Salmon Evolution will offset losses from the drop in Salmon Evolution'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 |
| Salmon Evolution vs. SalMar ASA | Salmon Evolution vs. Lery Seafood Group | Salmon Evolution vs. Pf Bakkafrost | Salmon Evolution vs. Grieg Seafood ASA |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |