Correlation Between Nippon Steel and Worthington Steel

Can any of the company-specific risk be diversified away by investing in both Nippon Steel and Worthington Steel 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 Nippon Steel and Worthington Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nippon Steel Corp and Worthington Steel, you can compare the effects of market volatilities on Nippon Steel and Worthington Steel 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 Nippon Steel with a short position of Worthington Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nippon Steel and Worthington Steel.

Diversification Opportunities for Nippon Steel and Worthington Steel

-0.63

Correlation Coefficient

Nippon Steel  Worthington Steel

Excellent diversification

The 3 months correlation between Nippon and Worthington is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Steel Corp and Worthington Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worthington Steel and Nippon Steel 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 Nippon Steel Corp are associated (or correlated) with Worthington Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worthington Steel has no effect on the direction of Nippon Steel i.e., Nippon Steel and Worthington Steel go up and down completely randomly.

Pair Corralation between Nippon Steel and Worthington Steel

Assuming the 90 days horizon Nippon Steel Corp is expected to generate 0.52 times more return on investment than Worthington Steel. However, Nippon Steel Corp is 1.92 times less risky than Worthington Steel. It trades about 0.28 of its potential returns per unit of risk. Worthington Steel is currently generating about -0.11 per unit of risk. If you would invest  635.00  in Nippon Steel Corp on December 21, 2024 and sell it today you would earn a total of  150.00  from holding Nippon Steel Corp or generate 23.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Nippon Steel Corp  vs.  Worthington Steel

Nippon Steel Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nippon Steel Corp are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental indicators, Nippon Steel showed solid returns over the last few months and may actually be approaching a breakup point.

Worthington Steel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Worthington Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Nippon Steel and Worthington Steel

The main advantage of trading using opposite Nippon Steel and Worthington Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nippon Steel position performs unexpectedly, Worthington Steel 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 Worthington Steel will offset losses from the drop in Worthington Steel's long position.

The idea behind Nippon Steel Corp and Worthington Steel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.