Correlation Between Universal Stainless and Salzgitter
Can any of the company-specific risk be diversified away by investing in both Universal Stainless and Salzgitter 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 Salzgitter 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 Salzgitter AG ADR, you can compare the effects of market volatilities on Universal Stainless and Salzgitter 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 Salzgitter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Stainless and Salzgitter.
Diversification Opportunities for Universal Stainless and Salzgitter
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Universal and Salzgitter is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Universal Stainless Alloy and Salzgitter AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salzgitter AG ADR 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 Salzgitter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salzgitter AG ADR has no effect on the direction of Universal Stainless i.e., Universal Stainless and Salzgitter go up and down completely randomly.
Pair Corralation between Universal Stainless and Salzgitter
Given the investment horizon of 90 days Universal Stainless is expected to generate 13.43 times less return on investment than Salzgitter. But when comparing it to its historical volatility, Universal Stainless Alloy is 23.98 times less risky than Salzgitter. It trades about 0.25 of its potential returns per unit of risk. Salzgitter AG ADR is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 150.00 in Salzgitter AG ADR on September 1, 2024 and sell it today you would earn a total of 27.00 from holding Salzgitter AG ADR or generate 18.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Stainless Alloy vs. Salzgitter AG ADR
Performance |
| Timeline |
| Universal Stainless Alloy |
| Salzgitter AG ADR |
Universal Stainless and Salzgitter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Stainless and Salzgitter
The main advantage of trading using opposite Universal Stainless and Salzgitter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Stainless position performs unexpectedly, Salzgitter 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 Salzgitter will offset losses from the drop in Salzgitter'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 |
| Salzgitter vs. Olympic Steel | Salzgitter vs. POSCO Holdings | Salzgitter vs. Steel Dynamics | Salzgitter vs. Universal Stainless Alloy |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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