Correlation Between STEEL DYNAMICS and Mitsui Chemicals

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

By analyzing existing cross correlation between STEEL DYNAMICS and Mitsui Chemicals, you can compare the effects of market volatilities on STEEL DYNAMICS and Mitsui Chemicals 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 Mitsui Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of STEEL DYNAMICS and Mitsui Chemicals.

Diversification Opportunities for STEEL DYNAMICS and Mitsui Chemicals

0.43

Correlation Coefficient

STEEL DYNAMICS  Mitsui Chemicals

Very weak diversification

The 3 months correlation between STEEL and Mitsui is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding STEEL DYNAMICS and Mitsui Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui Chemicals 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 Mitsui Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsui Chemicals has no effect on the direction of STEEL DYNAMICS i.e., STEEL DYNAMICS and Mitsui Chemicals go up and down completely randomly.

Pair Corralation between STEEL DYNAMICS and Mitsui Chemicals

Assuming the 90 days trading horizon STEEL DYNAMICS is expected to generate 1.13 times more return on investment than Mitsui Chemicals. However, STEEL DYNAMICS is 1.13 times more volatile than Mitsui Chemicals. It trades about 0.03 of its potential returns per unit of risk. Mitsui Chemicals is currently generating about -0.01 per unit of risk. If you would invest  9,074  in STEEL DYNAMICS on April 20, 2025 and sell it today you would earn a total of  2,222  from holding STEEL DYNAMICS or generate 24.49% return on investment over 90 days.

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

STEEL DYNAMICS  vs.  Mitsui Chemicals

STEEL DYNAMICS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in STEEL DYNAMICS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, STEEL DYNAMICS may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Mitsui Chemicals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsui Chemicals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, Mitsui Chemicals may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with STEEL DYNAMICS and Mitsui Chemicals

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

The idea behind STEEL DYNAMICS and Mitsui Chemicals 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.