Correlation Between Steel Dynamics and Smart For

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

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

Diversification Opportunities for Steel Dynamics and Smart For

0.0

Correlation Coefficient

Steel Dynamics  Smart For

Pay attention - limited upside

The 3 months correlation between Steel and Smart is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Smart for Life, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart for Life, 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 Smart For. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart for Life, has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Smart For go up and down completely randomly.

Pair Corralation between Steel Dynamics and Smart For

If you would invest  11,662  in Steel Dynamics on December 25, 2024 and sell it today you would earn a total of  1,004  from holding Steel Dynamics or generate 8.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Steel Dynamics  vs.  Smart for Life,

Steel Dynamics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Steel Dynamics are ranked lower than 5 (%) 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.

Smart for Life,

Risk-Adjusted Performance

Very Weak

Over the last 90 days Smart for Life, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Smart For is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Steel Dynamics and Smart For

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

The idea behind Steel Dynamics and Smart for Life, 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.