Correlation Between Thyssenkrupp and Ryerson Holding

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

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

Diversification Opportunities for Thyssenkrupp and Ryerson Holding

0.18

Correlation Coefficient

Thyssenkrupp  Ryerson Holding

Average diversification

The 3 months correlation between Thyssenkrupp and Ryerson is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Thyssenkrupp AG ADR and Ryerson Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ryerson Holding Corp and Thyssenkrupp 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 Thyssenkrupp AG ADR are associated (or correlated) with Ryerson Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ryerson Holding Corp has no effect on the direction of Thyssenkrupp i.e., Thyssenkrupp and Ryerson Holding go up and down completely randomly.

Pair Corralation between Thyssenkrupp and Ryerson Holding

Assuming the 90 days horizon Thyssenkrupp AG ADR is expected to generate 1.13 times more return on investment than Ryerson Holding. However, Thyssenkrupp is 1.13 times more volatile than Ryerson Holding Corp. It trades about 0.05 of its potential returns per unit of risk. Ryerson Holding Corp is currently generating about 0.01 per unit of risk. If you would invest  375.00  in Thyssenkrupp AG ADR on September 26, 2024 and sell it today you would earn a total of  30.00  from holding Thyssenkrupp AG ADR or generate 8.0% return on investment over 90 days.

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

Thyssenkrupp AG ADR  vs.  Ryerson Holding Corp

Thyssenkrupp AG ADR

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thyssenkrupp AG ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Thyssenkrupp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ryerson Holding Corp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Ryerson Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Ryerson Holding is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Thyssenkrupp and Ryerson Holding

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

The idea behind Thyssenkrupp AG ADR and Ryerson Holding 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.