Correlation Between Steel Dynamics and FANUC PUNSPADR

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

By analyzing existing cross correlation between Steel Dynamics and FANUC PUNSPADR 110, you can compare the effects of market volatilities on Steel Dynamics and FANUC PUNSPADR 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 FANUC PUNSPADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and FANUC PUNSPADR.

Diversification Opportunities for Steel Dynamics and FANUC PUNSPADR

0.35

Correlation Coefficient

Steel Dynamics  FANUC PUNSPADR

Weak diversification

The 3 months correlation between Steel and FANUC is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and FANUC PUNSPADR 110 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FANUC PUNSPADR 110 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 FANUC PUNSPADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FANUC PUNSPADR 110 has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and FANUC PUNSPADR go up and down completely randomly.

Pair Corralation between Steel Dynamics and FANUC PUNSPADR

Given the investment horizon of 90 days Steel Dynamics is expected to generate 1.02 times more return on investment than FANUC PUNSPADR. However, Steel Dynamics is 1.02 times more volatile than FANUC PUNSPADR 110. It trades about 0.12 of its potential returns per unit of risk. FANUC PUNSPADR 110 is currently generating about 0.04 per unit of risk. If you would invest  11,243  in Steel Dynamics on September 13, 2024 and sell it today you would earn a total of  2,112  from holding Steel Dynamics or generate 18.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Steel Dynamics  vs.  FANUC PUNSPADR 110

Steel Dynamics

Risk-Adjusted Performance

9 of 100

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.

FANUC PUNSPADR 110

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FANUC PUNSPADR 110 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, FANUC PUNSPADR is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Steel Dynamics and FANUC PUNSPADR

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

The idea behind Steel Dynamics and FANUC PUNSPADR 110 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.