Correlation Between Steel Dynamics and Arbe Robotics

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

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

Diversification Opportunities for Steel Dynamics and Arbe Robotics

-0.48

Correlation Coefficient

Steel Dynamics  Arbe Robotics

Very good diversification

The 3 months correlation between Steel and Arbe is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Arbe Robotics Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbe Robotics 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 Arbe Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbe Robotics has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Arbe Robotics go up and down completely randomly.

Pair Corralation between Steel Dynamics and Arbe Robotics

Given the investment horizon of 90 days Steel Dynamics is expected to generate 42.62 times less return on investment than Arbe Robotics. But when comparing it to its historical volatility, Steel Dynamics is 56.6 times less risky than Arbe Robotics. It trades about 0.17 of its potential returns per unit of risk. Arbe Robotics Ltd is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Arbe Robotics Ltd on September 3, 2024 and sell it today you would lose (2.00) from holding Arbe Robotics Ltd or give up 10.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	81.25%
Values	Daily Returns

Steel Dynamics  vs.  Arbe Robotics Ltd

Steel Dynamics

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Steel Dynamics are ranked lower than 13 (%) 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.

Arbe Robotics

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arbe Robotics Ltd are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Arbe Robotics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Steel Dynamics and Arbe Robotics

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

The idea behind Steel Dynamics and Arbe Robotics Ltd 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.