Correlation Between Steel Dynamics and Ilustrato Pictures

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

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

Diversification Opportunities for Steel Dynamics and Ilustrato Pictures

-0.6

Correlation Coefficient

Steel Dynamics  Ilustrato Pictures

Excellent diversification

The 3 months correlation between Steel and Ilustrato is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Ilustrato Pictures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ilustrato Pictures 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 Ilustrato Pictures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ilustrato Pictures has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Ilustrato Pictures go up and down completely randomly.

Pair Corralation between Steel Dynamics and Ilustrato Pictures

Given the investment horizon of 90 days Steel Dynamics is expected to generate 4.83 times less return on investment than Ilustrato Pictures. But when comparing it to its historical volatility, Steel Dynamics is 9.97 times less risky than Ilustrato Pictures. It trades about 0.08 of its potential returns per unit of risk. Ilustrato Pictures is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.20  in Ilustrato Pictures on December 29, 2024 and sell it today you would lose (0.10) from holding Ilustrato Pictures or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Steel Dynamics  vs.  Ilustrato Pictures

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.

Ilustrato Pictures

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ilustrato Pictures are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Ilustrato Pictures unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Steel Dynamics and Ilustrato Pictures

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

The idea behind Steel Dynamics and Ilustrato Pictures 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.