Correlation Between Steel Dynamics and Oberbank

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

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

Diversification Opportunities for Steel Dynamics and Oberbank

0.71

Correlation Coefficient

Steel Dynamics  Oberbank

Poor diversification

The 3 months correlation between Steel and Oberbank is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Oberbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oberbank 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 Oberbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oberbank AG has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Oberbank go up and down completely randomly.

Pair Corralation between Steel Dynamics and Oberbank

Given the investment horizon of 90 days Steel Dynamics is expected to generate 26.18 times more return on investment than Oberbank. However, Steel Dynamics is 26.18 times more volatile than Oberbank AG. It trades about 0.17 of its potential returns per unit of risk. Oberbank AG is currently generating about 0.14 per unit of risk. If you would invest  11,091  in Steel Dynamics on September 5, 2024 and sell it today you would earn a total of  3,229  from holding Steel Dynamics or generate 29.11% return on investment over 90 days.

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

Steel Dynamics  vs.  Oberbank AG

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.

Oberbank AG

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oberbank AG are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Oberbank is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Steel Dynamics and Oberbank

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

The idea behind Steel Dynamics and Oberbank 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.