Correlation Between Steel Dynamics and Italian Thai

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

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

Diversification Opportunities for Steel Dynamics and Italian Thai

-0.19

Correlation Coefficient

Steel Dynamics  Italian Thai

Good diversification

The 3 months correlation between Steel and Italian is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Italian Thai Development Publi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Italian Thai Develop 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 Italian Thai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Italian Thai Develop has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Italian Thai go up and down completely randomly.

Pair Corralation between Steel Dynamics and Italian Thai

Given the investment horizon of 90 days Steel Dynamics is expected to generate 37.81 times less return on investment than Italian Thai. But when comparing it to its historical volatility, Steel Dynamics is 51.0 times less risky than Italian Thai. It trades about 0.17 of its potential returns per unit of risk. Italian Thai Development Public is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Italian Thai Development Public on September 3, 2024 and sell it today you would earn a total of  53.00  from holding Italian Thai Development Public or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Steel Dynamics  vs.  Italian Thai Development Publi

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.

Italian Thai Develop

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Italian Thai Development Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, Italian Thai disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Steel Dynamics and Italian Thai

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

The idea behind Steel Dynamics and Italian Thai Development Public 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.