Correlation Between Yamaha and Steel Dynamics
Can any of the company-specific risk be diversified away by investing in both Yamaha 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 Yamaha and Steel Dynamics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yamaha and Steel Dynamics, you can compare the effects of market volatilities on Yamaha 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 Yamaha with a short position of Steel Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yamaha and Steel Dynamics.
Diversification Opportunities for Yamaha and Steel Dynamics
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Yamaha and Steel is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Yamaha and Steel Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Dynamics and Yamaha 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 Yamaha 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 Yamaha i.e., Yamaha and Steel Dynamics go up and down completely randomly.
Pair Corralation between Yamaha and Steel Dynamics
Assuming the 90 days horizon Yamaha is expected to under-perform the Steel Dynamics. In addition to that, Yamaha is 1.17 times more volatile than Steel Dynamics. It trades about -0.12 of its total potential returns per unit of risk. Steel Dynamics is currently generating about 0.14 per unit of volatility. If you would invest 12,378 in Steel Dynamics on August 31, 2024 and sell it today you would earn a total of 1,130 from holding Steel Dynamics or generate 9.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Yamaha vs. Steel Dynamics
Performance |
| Timeline |
| Yamaha |
| Steel Dynamics |
Yamaha and Steel Dynamics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yamaha and Steel Dynamics
The main advantage of trading using opposite Yamaha and Steel Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yamaha 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.| Yamaha vs. Li Ning Company | Yamaha vs. Trip Group Limited | Yamaha vs. Superior Plus Corp | Yamaha vs. NMI Holdings |
| Steel Dynamics vs. AUTO TRADER ADR | Steel Dynamics vs. SIDETRADE EO 1 | Steel Dynamics vs. Tradeweb Markets | Steel Dynamics vs. ON SEMICONDUCTOR |
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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