Correlation Between United States and AK Steel

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Can any of the company-specific risk be diversified away by investing in both United States 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 United States and AK Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and AK Steel Holding, you can compare the effects of market volatilities on United States 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 United States with a short position of AK Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and AK Steel.

Diversification Opportunities for United States and AK Steel

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between United and AKS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel 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 United States 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 United States Steel 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 United States i.e., United States and AK Steel go up and down completely randomly.

Pair Corralation between United States and AK Steel

If you would invest (100.00) in AK Steel Holding on December 29, 2023 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 Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

United States Steel  vs.  AK Steel Holding

 Performance 
       Timeline  
United States Steel 

Risk-Adjusted Performance

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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 unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
AK Steel Holding 

Risk-Adjusted Performance

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High
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 and AK Steel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with United States and AK Steel

The main advantage of trading using opposite United States and AK Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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.
The idea behind United States Steel and AK Steel Holding 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 Directory module to find actively traded commodities issued by global exchanges.

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