Correlation Between Steel Dynamics and Medincell

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

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

Diversification Opportunities for Steel Dynamics and Medincell

0.2

Correlation Coefficient

Steel Dynamics  Medincell

Modest diversification

The 3 months correlation between Steel and Medincell is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Medincell SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medincell SA 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 Medincell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medincell SA has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Medincell go up and down completely randomly.

Pair Corralation between Steel Dynamics and Medincell

Given the investment horizon of 90 days Steel Dynamics is expected to generate 1.02 times less return on investment than Medincell. In addition to that, Steel Dynamics is 1.01 times more volatile than Medincell SA. It trades about 0.11 of its total potential returns per unit of risk. Medincell SA is currently generating about 0.12 per unit of volatility. If you would invest  1,538  in Medincell SA on September 5, 2024 and sell it today you would earn a total of  118.00  from holding Medincell SA or generate 7.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Steel Dynamics  vs.  Medincell SA

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.

Medincell SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medincell SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Steel Dynamics and Medincell

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

The idea behind Steel Dynamics and Medincell SA 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.