Correlation Between STEEL DYNAMICS and DBS Group

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

By analyzing existing cross correlation between STEEL DYNAMICS and DBS Group Holdings, you can compare the effects of market volatilities on STEEL DYNAMICS and DBS Group 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 STEEL DYNAMICS with a short position of DBS Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of STEEL DYNAMICS and DBS Group.

Diversification Opportunities for STEEL DYNAMICS and DBS Group

0.01

Correlation Coefficient

STEEL DYNAMICS  DBS Group

Significant diversification

The 3 months correlation between STEEL and DBS is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding STEEL DYNAMICS and DBS Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DBS Group Holdings and STEEL DYNAMICS 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 STEEL DYNAMICS are associated (or correlated) with DBS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DBS Group Holdings has no effect on the direction of STEEL DYNAMICS i.e., STEEL DYNAMICS and DBS Group go up and down completely randomly.

Pair Corralation between STEEL DYNAMICS and DBS Group

Assuming the 90 days trading horizon STEEL DYNAMICS is expected to under-perform the DBS Group. In addition to that, STEEL DYNAMICS is 1.33 times more volatile than DBS Group Holdings. It trades about -0.06 of its total potential returns per unit of risk. DBS Group Holdings is currently generating about 0.18 per unit of volatility. If you would invest  2,646  in DBS Group Holdings on October 9, 2024 and sell it today you would earn a total of  454.00  from holding DBS Group Holdings or generate 17.16% return on investment over 90 days.

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

STEEL DYNAMICS  vs.  DBS Group Holdings

STEEL DYNAMICS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STEEL DYNAMICS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

DBS Group Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DBS Group Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, DBS Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with STEEL DYNAMICS and DBS Group

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

The idea behind STEEL DYNAMICS and DBS Group Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.