Correlation Between Universal Stainless and Klöckner
Can any of the company-specific risk be diversified away by investing in both Universal Stainless and Klöckner 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 Universal Stainless and Klöckner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Stainless Alloy and Klckner Co SE, you can compare the effects of market volatilities on Universal Stainless and Klöckner 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 Universal Stainless with a short position of Klöckner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Stainless and Klöckner.
Diversification Opportunities for Universal Stainless and Klöckner
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Universal and Klöckner is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Universal Stainless Alloy and Klckner Co SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klckner Co SE and Universal Stainless 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 Universal Stainless Alloy are associated (or correlated) with Klöckner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klckner Co SE has no effect on the direction of Universal Stainless i.e., Universal Stainless and Klöckner go up and down completely randomly.
Pair Corralation between Universal Stainless and Klöckner
Given the investment horizon of 90 days Universal Stainless is expected to generate 2.45 times less return on investment than Klöckner. But when comparing it to its historical volatility, Universal Stainless Alloy is 2.32 times less risky than Klöckner. It trades about 0.2 of its potential returns per unit of risk. Klckner Co SE is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 514.00 in Klckner Co SE on August 29, 2024 and sell it today you would earn a total of 21.00 from holding Klckner Co SE or generate 4.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Universal Stainless Alloy vs. Klckner Co SE
Performance |
| Timeline |
| Universal Stainless Alloy |
| Klckner Co SE |
Universal Stainless and Klöckner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Stainless and Klöckner
The main advantage of trading using opposite Universal Stainless and Klöckner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Stainless position performs unexpectedly, Klöckner 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 Klöckner will offset losses from the drop in Klöckner's long position.| Universal Stainless vs. Olympic Steel | Universal Stainless vs. Outokumpu Oyj ADR | Universal Stainless vs. Usinas Siderurgicas de | Universal Stainless vs. POSCO Holdings |
| Klöckner vs. Companhia Siderurgica Nacional | Klöckner vs. Olympic Steel | Klöckner vs. Universal Stainless Alloy | Klöckner vs. Usinas Siderurgicas de |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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