Correlation Between THORNEY TECHS and STEEL DYNAMICS
Can any of the company-specific risk be diversified away by investing in both THORNEY TECHS and STEEL DYNAMICS 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 THORNEY TECHS and STEEL DYNAMICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THORNEY TECHS LTD and STEEL DYNAMICS, you can compare the effects of market volatilities on THORNEY TECHS and STEEL DYNAMICS 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 THORNEY TECHS with a short position of STEEL DYNAMICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of THORNEY TECHS and STEEL DYNAMICS.
Diversification Opportunities for THORNEY TECHS and STEEL DYNAMICS
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between THORNEY and STEEL is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding THORNEY TECHS LTD and STEEL DYNAMICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STEEL DYNAMICS and THORNEY TECHS 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 THORNEY TECHS LTD are associated (or correlated) with STEEL DYNAMICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STEEL DYNAMICS has no effect on the direction of THORNEY TECHS i.e., THORNEY TECHS and STEEL DYNAMICS go up and down completely randomly.
Pair Corralation between THORNEY TECHS and STEEL DYNAMICS
Assuming the 90 days horizon THORNEY TECHS is expected to generate 21.79 times less return on investment than STEEL DYNAMICS. In addition to that, THORNEY TECHS is 1.62 times more volatile than STEEL DYNAMICS. It trades about 0.01 of its total potential returns per unit of risk. STEEL DYNAMICS is currently generating about 0.29 per unit of volatility. If you would invest 10,912 in STEEL DYNAMICS on November 6, 2024 and sell it today you would earn a total of 1,490 from holding STEEL DYNAMICS or generate 13.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
THORNEY TECHS LTD vs. STEEL DYNAMICS
Performance |
| Timeline |
| THORNEY TECHS LTD |
| STEEL DYNAMICS |
THORNEY TECHS and STEEL DYNAMICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THORNEY TECHS and STEEL DYNAMICS
The main advantage of trading using opposite THORNEY TECHS and STEEL DYNAMICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THORNEY TECHS position performs unexpectedly, STEEL DYNAMICS 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 STEEL DYNAMICS will offset losses from the drop in STEEL DYNAMICS's long position.| THORNEY TECHS vs. Take Two Interactive Software | THORNEY TECHS vs. Kingdee International Software | THORNEY TECHS vs. CyberArk Software | THORNEY TECHS vs. Constellation Software |
| STEEL DYNAMICS vs. NORWEGIAN AIR SHUT | STEEL DYNAMICS vs. MGIC INVESTMENT | STEEL DYNAMICS vs. HK Electric Investments | STEEL DYNAMICS vs. SYSTEMAIR 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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