Correlation Between Steel Dynamics and Hemp
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Hemp 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 Hemp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Hemp Inc, you can compare the effects of market volatilities on Steel Dynamics and Hemp 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 Hemp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Hemp.
Diversification Opportunities for Steel Dynamics and Hemp
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Steel and Hemp is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Hemp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hemp Inc 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 Hemp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hemp Inc has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Hemp go up and down completely randomly.
Pair Corralation between Steel Dynamics and Hemp
Given the investment horizon of 90 days Steel Dynamics is expected to generate 75.89 times less return on investment than Hemp. But when comparing it to its historical volatility, Steel Dynamics is 61.42 times less risky than Hemp. It trades about 0.09 of its potential returns per unit of risk. Hemp Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Hemp Inc on December 27, 2024 and sell it today you would earn a total of 0.00 from holding Hemp Inc or generate 0.0% 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. Hemp Inc
Performance |
Timeline |
Steel Dynamics |
Hemp Inc |
Steel Dynamics and Hemp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Steel Dynamics and Hemp
The main advantage of trading using opposite Steel Dynamics and Hemp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Hemp 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 Hemp will offset losses from the drop in Hemp's long position.Steel Dynamics vs. Cleveland Cliffs | Steel Dynamics vs. United States Steel | Steel Dynamics vs. ArcelorMittal SA ADR | Steel Dynamics vs. Reliance Steel Aluminum |
Check out your portfolio center.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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
FinTech Suite Use AI to screen and filter profitable investment opportunities | |
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |