Correlation Between American Lithium and Olympic Steel
Can any of the company-specific risk be diversified away by investing in both American Lithium and Olympic 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 American Lithium and Olympic Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Lithium Corp and Olympic Steel, you can compare the effects of market volatilities on American Lithium and Olympic 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 American Lithium with a short position of Olympic Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Lithium and Olympic Steel.
Diversification Opportunities for American Lithium and Olympic Steel
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and Olympic is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding American Lithium Corp and Olympic Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Steel and American Lithium 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 American Lithium Corp are associated (or correlated) with Olympic Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olympic Steel has no effect on the direction of American Lithium i.e., American Lithium and Olympic Steel go up and down completely randomly.
Pair Corralation between American Lithium and Olympic Steel
Given the investment horizon of 90 days American Lithium Corp is expected to under-perform the Olympic Steel. In addition to that, American Lithium is 1.15 times more volatile than Olympic Steel. It trades about -0.11 of its total potential returns per unit of risk. Olympic Steel is currently generating about 0.21 per unit of volatility. If you would invest 3,638 in Olympic Steel on August 31, 2024 and sell it today you would earn a total of 593.00 from holding Olympic Steel or generate 16.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Lithium Corp vs. Olympic Steel
Performance |
| Timeline |
| American Lithium Corp |
| Olympic Steel |
American Lithium and Olympic Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Lithium and Olympic Steel
The main advantage of trading using opposite American Lithium and Olympic Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Lithium position performs unexpectedly, Olympic 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 Olympic Steel will offset losses from the drop in Olympic Steel's long position.| American Lithium vs. Olympic Steel | American Lithium vs. Kaiser Aluminum | American Lithium vs. Diageo PLC ADR | American Lithium vs. Century Aluminum |
| Olympic Steel vs. Universal Stainless Alloy | Olympic Steel vs. Outokumpu Oyj ADR | Olympic Steel vs. Usinas Siderurgicas de | Olympic Steel vs. POSCO Holdings |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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