Correlation Between Voestalpine and Steel Dynamics
Can any of the company-specific risk be diversified away by investing in both Voestalpine 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 Voestalpine and Steel Dynamics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Voestalpine AG and Steel Dynamics, you can compare the effects of market volatilities on Voestalpine 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 Voestalpine with a short position of Steel Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voestalpine and Steel Dynamics.
Diversification Opportunities for Voestalpine and Steel Dynamics
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Voestalpine and Steel is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Voestalpine AG and Steel Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Dynamics and Voestalpine 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 Voestalpine AG 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 Voestalpine i.e., Voestalpine and Steel Dynamics go up and down completely randomly.
Pair Corralation between Voestalpine and Steel Dynamics
Assuming the 90 days horizon Voestalpine AG is expected to under-perform the Steel Dynamics. In addition to that, Voestalpine is 1.02 times more volatile than Steel Dynamics. It trades about -0.05 of its total potential returns per unit of risk. Steel Dynamics is currently generating about 0.06 per unit of volatility. If you would invest 11,282 in Steel Dynamics on September 2, 2024 and sell it today you would earn a total of 3,245 from holding Steel Dynamics or generate 28.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 77.02% |
| Values | Daily Returns |
Voestalpine AG vs. Steel Dynamics
Performance |
| Timeline |
| Voestalpine AG |
| Steel Dynamics |
Voestalpine and Steel Dynamics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voestalpine and Steel Dynamics
The main advantage of trading using opposite Voestalpine and Steel Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voestalpine 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' long position.| Voestalpine vs. Steel Dynamics | Voestalpine vs. Huadi International Group | Voestalpine vs. Nucor Corp | Voestalpine vs. Cleveland Cliffs |
| Steel Dynamics vs. Cleveland Cliffs | Steel Dynamics vs. United States Steel | Steel Dynamics vs. ArcelorMittal SA ADR | Steel Dynamics vs. Reliance Steel Aluminum |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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