Correlation Between Celanese and Olympic Steel
Can any of the company-specific risk be diversified away by investing in both Celanese 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 Celanese and Olympic Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Celanese and Olympic Steel, you can compare the effects of market volatilities on Celanese 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 Celanese with a short position of Olympic Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celanese and Olympic Steel.
Diversification Opportunities for Celanese and Olympic Steel
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Celanese and Olympic is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Celanese and Olympic Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Steel and Celanese 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 Celanese 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 Celanese i.e., Celanese and Olympic Steel go up and down completely randomly.
Pair Corralation between Celanese and Olympic Steel
Allowing for the 90-day total investment horizon Celanese is expected to under-perform the Olympic Steel. But the stock apears to be less risky and, when comparing its historical volatility, Celanese is 1.24 times less risky than Olympic Steel. The stock trades about -0.14 of its potential returns per unit of risk. The Olympic Steel is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 4,012 in Olympic Steel on September 18, 2024 and sell it today you would lose (167.00) from holding Olympic Steel or give up 4.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Celanese vs. Olympic Steel
Performance |
| Timeline |
| Celanese |
| Olympic Steel |
Celanese and Olympic Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Celanese and Olympic Steel
The main advantage of trading using opposite Celanese and Olympic Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celanese 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.| Celanese vs. Tronox Holdings PLC | Celanese vs. Green Plains Renewable | Celanese vs. Lsb Industries | Celanese vs. Valhi Inc |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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