Correlation Between Steel Dynamics and BANK HANDLOWY

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

By analyzing existing cross correlation between Steel Dynamics and BANK HANDLOWY, you can compare the effects of market volatilities on Steel Dynamics and BANK HANDLOWY 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 BANK HANDLOWY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and BANK HANDLOWY.

Diversification Opportunities for Steel Dynamics and BANK HANDLOWY

0.62

Correlation Coefficient

Steel Dynamics  BANK HANDLOWY

Poor diversification

The 3 months correlation between Steel and BANK is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and BANK HANDLOWY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK HANDLOWY 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 BANK HANDLOWY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK HANDLOWY has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and BANK HANDLOWY go up and down completely randomly.

Pair Corralation between Steel Dynamics and BANK HANDLOWY

Given the investment horizon of 90 days Steel Dynamics is expected to generate 2.23 times less return on investment than BANK HANDLOWY. In addition to that, Steel Dynamics is 2.2 times more volatile than BANK HANDLOWY. It trades about 0.11 of its total potential returns per unit of risk. BANK HANDLOWY is currently generating about 0.53 per unit of volatility. If you would invest  2,070  in BANK HANDLOWY on December 28, 2024 and sell it today you would earn a total of  760.00  from holding BANK HANDLOWY or generate 36.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.77%
Values	Daily Returns

Steel Dynamics  vs.  BANK HANDLOWY

Steel Dynamics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Steel Dynamics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, Steel Dynamics exhibited solid returns over the last few months and may actually be approaching a breakup point.

BANK HANDLOWY

Risk-Adjusted Performance

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in BANK HANDLOWY are ranked lower than 41 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BANK HANDLOWY unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Steel Dynamics and BANK HANDLOWY

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

The idea behind Steel Dynamics and BANK HANDLOWY 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.