Correlation Between Steel Dynamics and Vytrus Biotech

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Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and Vytrus Biotech 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 Vytrus Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Vytrus Biotech SA, you can compare the effects of market volatilities on Steel Dynamics and Vytrus Biotech 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 Vytrus Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Vytrus Biotech.

Diversification Opportunities for Steel Dynamics and Vytrus Biotech

-0.78
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Steel and Vytrus is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Vytrus Biotech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vytrus Biotech 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 Vytrus Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vytrus Biotech SA has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and Vytrus Biotech go up and down completely randomly.

Pair Corralation between Steel Dynamics and Vytrus Biotech

Given the investment horizon of 90 days Steel Dynamics is expected to under-perform the Vytrus Biotech. In addition to that, Steel Dynamics is 1.8 times more volatile than Vytrus Biotech SA. It trades about -0.26 of its total potential returns per unit of risk. Vytrus Biotech SA is currently generating about 0.17 per unit of volatility. If you would invest  214.00  in Vytrus Biotech SA on September 13, 2024 and sell it today you would earn a total of  6.00  from holding Vytrus Biotech SA or generate 2.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

Steel Dynamics  vs.  Vytrus Biotech SA

 Performance 
       Timeline  
Steel Dynamics 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Steel Dynamics are ranked lower than 9 (%) 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.
Vytrus Biotech SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Vytrus Biotech SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Steel Dynamics and Vytrus Biotech Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Steel Dynamics and Vytrus Biotech

The main advantage of trading using opposite Steel Dynamics and Vytrus Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, Vytrus Biotech 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 Vytrus Biotech will offset losses from the drop in Vytrus Biotech's long position.
The idea behind Steel Dynamics and Vytrus Biotech 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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