Correlation Between Constellium and Olympic Steel
Can any of the company-specific risk be diversified away by investing in both Constellium 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 Constellium and Olympic Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Constellium Nv and Olympic Steel, you can compare the effects of market volatilities on Constellium 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 Constellium with a short position of Olympic Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellium and Olympic Steel.
Diversification Opportunities for Constellium and Olympic Steel
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Constellium and Olympic is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Constellium Nv and Olympic Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Steel and Constellium 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 Constellium Nv 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 Constellium i.e., Constellium and Olympic Steel go up and down completely randomly.
Pair Corralation between Constellium and Olympic Steel
Given the investment horizon of 90 days Constellium Nv is expected to under-perform the Olympic Steel. But the stock apears to be less risky and, when comparing its historical volatility, Constellium Nv is 1.57 times less risky than Olympic Steel. The stock trades about -0.01 of its potential returns per unit of risk. The Olympic Steel is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 4,200 in Olympic Steel on September 12, 2024 and sell it today you would earn a total of 12.00 from holding Olympic Steel or generate 0.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Constellium Nv vs. Olympic Steel
Performance |
| Timeline |
| Constellium Nv |
| Olympic Steel |
Constellium and Olympic Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellium and Olympic Steel
The main advantage of trading using opposite Constellium and Olympic Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellium 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.| Constellium vs. Century Aluminum | Constellium vs. Alcoa Corp | Constellium vs. China Hongqiao Group | Constellium vs. Norsk Hydro ASA |
| 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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