Correlation Between Thyssenkrupp and Allegheny Technologies
Can any of the company-specific risk be diversified away by investing in both Thyssenkrupp and Allegheny Technologies 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 Thyssenkrupp and Allegheny Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between thyssenkrupp AG and Allegheny Technologies Incorporated, you can compare the effects of market volatilities on Thyssenkrupp and Allegheny Technologies 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 Thyssenkrupp with a short position of Allegheny Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thyssenkrupp and Allegheny Technologies.
Diversification Opportunities for Thyssenkrupp and Allegheny Technologies
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Thyssenkrupp and Allegheny is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding thyssenkrupp AG and Allegheny Technologies Incorpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegheny Technologies and Thyssenkrupp 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 thyssenkrupp AG are associated (or correlated) with Allegheny Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegheny Technologies has no effect on the direction of Thyssenkrupp i.e., Thyssenkrupp and Allegheny Technologies go up and down completely randomly.
Pair Corralation between Thyssenkrupp and Allegheny Technologies
Assuming the 90 days trading horizon thyssenkrupp AG is expected to under-perform the Allegheny Technologies. In addition to that, Thyssenkrupp is 1.08 times more volatile than Allegheny Technologies Incorporated. It trades about -0.02 of its total potential returns per unit of risk. Allegheny Technologies Incorporated is currently generating about 0.07 per unit of volatility. If you would invest 2,780 in Allegheny Technologies Incorporated on September 25, 2024 and sell it today you would earn a total of 2,412 from holding Allegheny Technologies Incorporated or generate 86.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
thyssenkrupp AG vs. Allegheny Technologies Incorpo
Performance |
| Timeline |
| thyssenkrupp AG |
| Allegheny Technologies |
Thyssenkrupp and Allegheny Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thyssenkrupp and Allegheny Technologies
The main advantage of trading using opposite Thyssenkrupp and Allegheny Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thyssenkrupp position performs unexpectedly, Allegheny Technologies 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 Allegheny Technologies will offset losses from the drop in Allegheny Technologies' long position.| Thyssenkrupp vs. Allegheny Technologies Incorporated | Thyssenkrupp vs. China International Marine | Thyssenkrupp vs. thyssenkrupp AG | Thyssenkrupp vs. thyssenkrupp AG |
| Allegheny Technologies vs. China International Marine | Allegheny Technologies vs. thyssenkrupp AG | Allegheny Technologies vs. thyssenkrupp AG | Allegheny Technologies vs. thyssenkrupp AG |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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