Correlation Between Insteel Industries and Osaka Steel
Can any of the company-specific risk be diversified away by investing in both Insteel Industries and Osaka 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 Insteel Industries and Osaka Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insteel Industries and Osaka Steel Co,, you can compare the effects of market volatilities on Insteel Industries and Osaka 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 Insteel Industries with a short position of Osaka Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insteel Industries and Osaka Steel.
Diversification Opportunities for Insteel Industries and Osaka Steel
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Insteel and Osaka is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and Osaka Steel Co, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Osaka Steel Co, and Insteel Industries 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 Insteel Industries are associated (or correlated) with Osaka Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Osaka Steel Co, has no effect on the direction of Insteel Industries i.e., Insteel Industries and Osaka Steel go up and down completely randomly.
Pair Corralation between Insteel Industries and Osaka Steel
Given the investment horizon of 90 days Insteel Industries is expected to generate 40.53 times more return on investment than Osaka Steel. However, Insteel Industries is 40.53 times more volatile than Osaka Steel Co,. It trades about 0.02 of its potential returns per unit of risk. Osaka Steel Co, is currently generating about 0.06 per unit of risk. If you would invest 2,718 in Insteel Industries on September 12, 2024 and sell it today you would earn a total of 248.00 from holding Insteel Industries or generate 9.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Insteel Industries vs. Osaka Steel Co,
Performance |
| Timeline |
| Insteel Industries |
| Osaka Steel Co, |
Insteel Industries and Osaka Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insteel Industries and Osaka Steel
The main advantage of trading using opposite Insteel Industries and Osaka Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries position performs unexpectedly, Osaka 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 Osaka Steel will offset losses from the drop in Osaka Steel's long position.| Insteel Industries vs. Mayville Engineering Co | Insteel Industries vs. Gulf Island Fabrication | Insteel Industries vs. ESAB Corp | Insteel Industries vs. Northwest Pipe |
| Osaka Steel vs. Copa Holdings SA | Osaka Steel vs. United Airlines Holdings | Osaka Steel vs. Delta Air Lines | Osaka Steel vs. SkyWest |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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