Correlation Between Nucor and Angang Steel

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

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

Diversification Opportunities for Nucor and Angang Steel

0.79

Correlation Coefficient

Nucor  Angang Steel

Poor diversification

The 3 months correlation between Nucor and Angang is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Nucor and Angang Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angang Steel and Nucor 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 Nucor are associated (or correlated) with Angang Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Angang Steel has no effect on the direction of Nucor i.e., Nucor and Angang Steel go up and down completely randomly.

Pair Corralation between Nucor and Angang Steel

Assuming the 90 days horizon Nucor is expected to generate 2.53 times less return on investment than Angang Steel. But when comparing it to its historical volatility, Nucor is 1.8 times less risky than Angang Steel. It trades about 0.13 of its potential returns per unit of risk. Angang Steel is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Angang Steel on April 25, 2025 and sell it today you would earn a total of  9.00  from holding Angang Steel or generate 56.25% return on investment over 90 days.

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

Nucor  vs.  Angang Steel

Nucor

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nucor are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nucor reported solid returns over the last few months and may actually be approaching a breakup point.

Angang Steel

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Angang Steel are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Angang Steel reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nucor and Angang Steel

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

The idea behind Nucor and Angang 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.