Correlation Between AK Steel and United States

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

By analyzing existing cross correlation between AK Steel Holding and United States Steel, you can compare the effects of market volatilities on AK Steel and United States 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 AK Steel with a short position of United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of AK Steel and United States.

Diversification Opportunities for AK Steel and United States

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Correlation Coefficient

AK Steel  United States

Pay attention - limited upside

The 3 months correlation between AKS and United is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AK Steel Holding and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel and AK 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 AK Steel Holding are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of AK Steel i.e., AK Steel and United States go up and down completely randomly.

Pair Corralation between AK Steel and United States

If you would invest (100.00) in AK Steel Holding on January 25, 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	0.0%
Values	Daily Returns

AK Steel Holding  vs.  United States Steel

AK Steel Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AK Steel Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, AK Steel is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

United States Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with AK Steel and United States

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

The idea behind AK Steel Holding and United States Steel 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.