Correlation Between Steel Dynamics and Usinas Siderurgicas
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Usinas Siderurgicas 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 Usinas Siderurgicas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Usinas Siderurgicas de, you can compare the effects of market volatilities on Steel Dynamics and Usinas Siderurgicas 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 Usinas Siderurgicas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Usinas Siderurgicas.
Diversification Opportunities for Steel Dynamics and Usinas Siderurgicas
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Steel and Usinas is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Usinas Siderurgicas de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Usinas Siderurgicas 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 Usinas Siderurgicas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Usinas Siderurgicas has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Usinas Siderurgicas go up and down completely randomly.
Pair Corralation between Steel Dynamics and Usinas Siderurgicas
Given the investment horizon of 90 days Steel Dynamics is expected to generate 0.84 times more return on investment than Usinas Siderurgicas. However, Steel Dynamics is 1.19 times less risky than Usinas Siderurgicas. It trades about 0.11 of its potential returns per unit of risk. Usinas Siderurgicas de is currently generating about -0.11 per unit of risk. If you would invest 13,572 in Steel Dynamics on August 27, 2024 and sell it today you would earn a total of 926.00 from holding Steel Dynamics or generate 6.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steel Dynamics vs. Usinas Siderurgicas de
Performance |
| Timeline |
| Steel Dynamics |
| Usinas Siderurgicas |
Steel Dynamics and Usinas Siderurgicas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Usinas Siderurgicas
The main advantage of trading using opposite Steel Dynamics and Usinas Siderurgicas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Usinas Siderurgicas 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 Usinas Siderurgicas will offset losses from the drop in Usinas Siderurgicas' long position.The idea behind Steel Dynamics and Usinas Siderurgicas de 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.| Usinas Siderurgicas vs. Olympic Steel | Usinas Siderurgicas vs. Mesabi Trust | Usinas Siderurgicas vs. Universal Stainless Alloy | Usinas Siderurgicas vs. Outokumpu Oyj ADR |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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