Correlation Between Nucor and Daido Steel

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

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

Diversification Opportunities for Nucor and Daido Steel

-0.09

Correlation Coefficient

Nucor  Daido Steel

Good diversification

The 3 months correlation between Nucor and Daido is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Nucor and Daido Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daido Steel and Nucor 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 Nucor are associated (or correlated) with Daido Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daido Steel has no effect on the direction of Nucor i.e., Nucor and Daido Steel go up and down completely randomly.

Pair Corralation between Nucor and Daido Steel

Assuming the 90 days horizon Nucor is expected to under-perform the Daido Steel. In addition to that, Nucor is 1.36 times more volatile than Daido Steel Co. It trades about -0.55 of its total potential returns per unit of risk. Daido Steel Co is currently generating about -0.02 per unit of volatility. If you would invest  725.00  in Daido Steel Co on October 6, 2024 and sell it today you would lose (5.00) from holding Daido Steel Co or give up 0.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Nucor  vs.  Daido Steel Co

Nucor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nucor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Daido Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daido Steel Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Nucor and Daido Steel

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

The idea behind Nucor and Daido Steel Co 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.