Correlation Between Salzgitter and Nucor Corp

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

By analyzing existing cross correlation between Salzgitter AG ADR and Nucor Corp, you can compare the effects of market volatilities on Salzgitter and Nucor Corp 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 Salzgitter with a short position of Nucor Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salzgitter and Nucor Corp.

Diversification Opportunities for Salzgitter and Nucor Corp

0.41

Correlation Coefficient

Salzgitter  Nucor Corp

Very weak diversification

The 3 months correlation between Salzgitter and Nucor is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Salzgitter AG ADR and Nucor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nucor Corp and Salzgitter 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 Salzgitter AG ADR are associated (or correlated) with Nucor Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nucor Corp has no effect on the direction of Salzgitter i.e., Salzgitter and Nucor Corp go up and down completely randomly.

Pair Corralation between Salzgitter and Nucor Corp

Assuming the 90 days horizon Salzgitter AG ADR is expected to generate 1.68 times more return on investment than Nucor Corp. However, Salzgitter is 1.68 times more volatile than Nucor Corp. It trades about 0.02 of its potential returns per unit of risk. Nucor Corp is currently generating about -0.07 per unit of risk. If you would invest  163.00  in Salzgitter AG ADR on October 24, 2024 and sell it today you would earn a total of  1.00  from holding Salzgitter AG ADR or generate 0.61% return on investment over 90 days.

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

Salzgitter AG ADR  vs.  Nucor Corp

Salzgitter AG ADR

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Salzgitter AG ADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Salzgitter showed solid returns over the last few months and may actually be approaching a breakup point.

Nucor Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nucor Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Salzgitter and Nucor Corp

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

The idea behind Salzgitter AG ADR and Nucor Corp 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.