Correlation Between Steel Dynamics and Sekerbank TAS

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

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

Diversification Opportunities for Steel Dynamics and Sekerbank TAS

-0.83

Correlation Coefficient

Steel Dynamics  Sekerbank TAS

Pay attention - limited upside

The 3 months correlation between Steel and Sekerbank is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Sekerbank TAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekerbank TAS 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 Sekerbank TAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekerbank TAS has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Sekerbank TAS go up and down completely randomly.

Pair Corralation between Steel Dynamics and Sekerbank TAS

Given the investment horizon of 90 days Steel Dynamics is expected to generate 0.73 times more return on investment than Sekerbank TAS. However, Steel Dynamics is 1.37 times less risky than Sekerbank TAS. It trades about 0.11 of its potential returns per unit of risk. Sekerbank TAS is currently generating about -0.01 per unit of risk. If you would invest  11,334  in Steel Dynamics on December 28, 2024 and sell it today you would earn a total of  1,500  from holding Steel Dynamics or generate 13.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Steel Dynamics  vs.  Sekerbank TAS

Steel Dynamics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Steel Dynamics are ranked lower than 8 (%) 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.

Sekerbank TAS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sekerbank TAS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Sekerbank TAS is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Steel Dynamics and Sekerbank TAS

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

The idea behind Steel Dynamics and Sekerbank TAS 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.