Correlation Between Global Power and AK Steel
Can any of the company-specific risk be diversified away by investing in both Global Power and AK Steel 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 Global Power and AK Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Power Equipment and AK Steel Holding, you can compare the effects of market volatilities on Global Power and AK Steel 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 Global Power with a short position of AK Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Power and AK Steel.
Diversification Opportunities for Global Power and AK Steel
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Global and AKS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Global Power Equipment and AK Steel Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AK Steel Holding and Global Power 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 Global Power Equipment are associated (or correlated) with AK Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AK Steel Holding has no effect on the direction of Global Power i.e., Global Power and AK Steel go up and down completely randomly.
Pair Corralation between Global Power and AK Steel
If you would invest (100.00) in AK Steel Holding on January 20, 2024 and sell it today you would earn a total of 100.00 from holding AK Steel Holding or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Power Equipment vs. AK Steel Holding
Performance |
| Timeline |
| Global Power Equipment |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| AK Steel Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Global Power and AK Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Power and AK Steel
The main advantage of trading using opposite Global Power and AK Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Power position performs unexpectedly, AK Steel 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 AK Steel will offset losses from the drop in AK Steel's long position.| Global Power vs. Fidus Investment Corp | Global Power vs. Blue Owl Capital | Global Power vs. China Aircraft Leasing | Global Power vs. HE Equipment Services |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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