Correlation Between Steel Dynamics and DELHAIZE

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

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

Diversification Opportunities for Steel Dynamics and DELHAIZE

-0.33

Correlation Coefficient

Steel Dynamics  DELHAIZE

Very good diversification

The 3 months correlation between Steel and DELHAIZE is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and DELHAIZE GROUP SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DELHAIZE GROUP 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 DELHAIZE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DELHAIZE GROUP SA has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and DELHAIZE go up and down completely randomly.

Pair Corralation between Steel Dynamics and DELHAIZE

Given the investment horizon of 90 days Steel Dynamics is expected to under-perform the DELHAIZE. In addition to that, Steel Dynamics is 1.98 times more volatile than DELHAIZE GROUP SA. It trades about -0.04 of its total potential returns per unit of risk. DELHAIZE GROUP SA is currently generating about -0.04 per unit of volatility. If you would invest  10,250  in DELHAIZE GROUP SA on December 2, 2024 and sell it today you would lose (125.00) from holding DELHAIZE GROUP SA or give up 1.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	40.98%
Values	Daily Returns

Steel Dynamics  vs.  DELHAIZE GROUP SA

Steel Dynamics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Steel Dynamics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Steel Dynamics is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

DELHAIZE GROUP SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days DELHAIZE GROUP SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, DELHAIZE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Steel Dynamics and DELHAIZE

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

The idea behind Steel Dynamics and DELHAIZE GROUP 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.

Check out your portfolio center.

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 CEOs Directory module to screen CEOs from public companies around the world.