Correlation Between China Steel and SSAB AB
Can any of the company-specific risk be diversified away by investing in both China Steel and SSAB AB 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 China Steel and SSAB AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Steel and SSAB AB ADR, you can compare the effects of market volatilities on China Steel and SSAB AB 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 China Steel with a short position of SSAB AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Steel and SSAB AB.
Diversification Opportunities for China Steel and SSAB AB
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and SSAB is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding China Steel and SSAB AB ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSAB AB ADR and China Steel 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 China Steel are associated (or correlated) with SSAB AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSAB AB ADR has no effect on the direction of China Steel i.e., China Steel and SSAB AB go up and down completely randomly.
Pair Corralation between China Steel and SSAB AB
Assuming the 90 days horizon China Steel is expected to generate 1.88 times less return on investment than SSAB AB. But when comparing it to its historical volatility, China Steel is 17.46 times less risky than SSAB AB. It trades about 0.1 of its potential returns per unit of risk. SSAB AB ADR is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 317.00 in SSAB AB ADR on February 3, 2024 and sell it today you would lose (31.00) from holding SSAB AB ADR or give up 9.78% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 36.55% |
Values | Daily Returns |
China Steel vs. SSAB AB ADR
Performance |
Timeline |
China Steel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
SSAB AB ADR |
China Steel and SSAB AB Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Steel and SSAB AB
The main advantage of trading using opposite China Steel and SSAB AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Steel position performs unexpectedly, SSAB AB 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 SSAB AB will offset losses from the drop in SSAB AB's long position.China Steel vs. NiSource | China Steel vs. Artisan Partners Asset | China Steel vs. NorthWestern | China Steel vs. Black Hills |
SSAB AB vs. Nucor Corp | SSAB AB vs. United States Steel | SSAB AB vs. Reliance Steel Aluminum | SSAB AB vs. ArcelorMittal SA ADR |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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