Correlation Between Steel Dynamics and Zhongsheng Group
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Zhongsheng 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 Zhongsheng 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 Zhongsheng Group Holdings, you can compare the effects of market volatilities on Steel Dynamics and Zhongsheng 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 Zhongsheng Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Zhongsheng Group.
Diversification Opportunities for Steel Dynamics and Zhongsheng Group
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Steel and Zhongsheng is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Zhongsheng Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhongsheng Group Holdings 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 Zhongsheng Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhongsheng Group Holdings has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Zhongsheng Group go up and down completely randomly.
Pair Corralation between Steel Dynamics and Zhongsheng Group
Given the investment horizon of 90 days Steel Dynamics is expected to generate 3.72 times less return on investment than Zhongsheng Group. But when comparing it to its historical volatility, Steel Dynamics is 1.72 times less risky than Zhongsheng Group. It trades about 0.04 of its potential returns per unit of risk. Zhongsheng Group Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 169.00 in Zhongsheng Group Holdings on September 3, 2024 and sell it today you would earn a total of 87.00 from holding Zhongsheng Group Holdings or generate 51.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.32% |
| Values | Daily Returns |
Steel Dynamics vs. Zhongsheng Group Holdings
Performance |
| Timeline |
| Steel Dynamics |
| Zhongsheng Group Holdings |
Steel Dynamics and Zhongsheng Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Zhongsheng Group
The main advantage of trading using opposite Steel Dynamics and Zhongsheng Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Zhongsheng 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 Zhongsheng Group will offset losses from the drop in Zhongsheng 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 |
| Zhongsheng Group vs. SunCar Technology Group | Zhongsheng Group vs. Jiuzi Holdings | Zhongsheng Group vs. Vroom Inc | Zhongsheng Group vs. Carvana Co |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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