Correlation Between Steel Dynamics and CTS Eventim

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

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

Diversification Opportunities for Steel Dynamics and CTS Eventim

0.74

Correlation Coefficient

Steel Dynamics  CTS Eventim

Poor diversification

The 3 months correlation between Steel and CTS is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and CTS Eventim AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTS Eventim AG 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 CTS Eventim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTS Eventim AG has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and CTS Eventim go up and down completely randomly.

Pair Corralation between Steel Dynamics and CTS Eventim

Given the investment horizon of 90 days Steel Dynamics is expected to generate 1.53 times less return on investment than CTS Eventim. In addition to that, Steel Dynamics is 1.19 times more volatile than CTS Eventim AG. It trades about 0.08 of its total potential returns per unit of risk. CTS Eventim AG is currently generating about 0.14 per unit of volatility. If you would invest  8,165  in CTS Eventim AG on December 29, 2024 and sell it today you would earn a total of  1,375  from holding CTS Eventim AG or generate 16.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.31%
Values	Daily Returns

Steel Dynamics  vs.  CTS Eventim AG

Steel Dynamics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Steel Dynamics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, Steel Dynamics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

CTS Eventim AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CTS Eventim AG are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, CTS Eventim unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Steel Dynamics and CTS Eventim

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

The idea behind Steel Dynamics and CTS Eventim AG 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.