Correlation Between STEEL DYNAMICS and DONGJIANG ENVIRONMENTAL

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

By analyzing existing cross correlation between STEEL DYNAMICS and DONGJIANG ENVIRONMENTAL H, you can compare the effects of market volatilities on STEEL DYNAMICS and DONGJIANG ENVIRONMENTAL 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 DONGJIANG ENVIRONMENTAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of STEEL DYNAMICS and DONGJIANG ENVIRONMENTAL.

Diversification Opportunities for STEEL DYNAMICS and DONGJIANG ENVIRONMENTAL

0.68

Correlation Coefficient

STEEL DYNAMICS  DONGJIANG ENVIRONMENTAL

Poor diversification

The 3 months correlation between STEEL and DONGJIANG is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding STEEL DYNAMICS and DONGJIANG ENVIRONMENTAL H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DONGJIANG ENVIRONMENTAL 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 DONGJIANG ENVIRONMENTAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DONGJIANG ENVIRONMENTAL has no effect on the direction of STEEL DYNAMICS i.e., STEEL DYNAMICS and DONGJIANG ENVIRONMENTAL go up and down completely randomly.

Pair Corralation between STEEL DYNAMICS and DONGJIANG ENVIRONMENTAL

Assuming the 90 days trading horizon STEEL DYNAMICS is expected to generate 0.45 times more return on investment than DONGJIANG ENVIRONMENTAL. However, STEEL DYNAMICS is 2.22 times less risky than DONGJIANG ENVIRONMENTAL. It trades about 0.01 of its potential returns per unit of risk. DONGJIANG ENVIRONMENTAL H is currently generating about 0.0 per unit of risk. If you would invest  11,379  in STEEL DYNAMICS on October 26, 2024 and sell it today you would earn a total of  423.00  from holding STEEL DYNAMICS or generate 3.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

STEEL DYNAMICS  vs.  DONGJIANG ENVIRONMENTAL H

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 comparatively stable basic indicators, STEEL DYNAMICS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

DONGJIANG ENVIRONMENTAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DONGJIANG ENVIRONMENTAL H has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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 STEEL DYNAMICS and DONGJIANG ENVIRONMENTAL

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

The idea behind STEEL DYNAMICS and DONGJIANG ENVIRONMENTAL H 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.