Correlation Between Maanshan Iron and Olympic Steel
Can any of the company-specific risk be diversified away by investing in both Maanshan Iron 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 Maanshan Iron and Olympic Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maanshan Iron Steel and Olympic Steel, you can compare the effects of market volatilities on Maanshan Iron 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 Maanshan Iron with a short position of Olympic Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maanshan Iron and Olympic Steel.
Diversification Opportunities for Maanshan Iron and Olympic Steel
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Maanshan and Olympic is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Maanshan Iron Steel and Olympic Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Steel and Maanshan Iron 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 Maanshan Iron Steel 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 Maanshan Iron i.e., Maanshan Iron and Olympic Steel go up and down completely randomly.
Pair Corralation between Maanshan Iron and Olympic Steel
Assuming the 90 days horizon Maanshan Iron is expected to generate 3.5 times less return on investment than Olympic Steel. In addition to that, Maanshan Iron is 1.57 times more volatile than Olympic Steel. It trades about 0.0 of its total potential returns per unit of risk. Olympic Steel is currently generating about 0.01 per unit of volatility. If you would invest 4,330 in Olympic Steel on August 26, 2024 and sell it today you would lose (89.00) from holding Olympic Steel or give up 2.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maanshan Iron Steel vs. Olympic Steel
Performance |
| Timeline |
| Maanshan Iron Steel |
| Olympic Steel |
Maanshan Iron and Olympic Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maanshan Iron and Olympic Steel
The main advantage of trading using opposite Maanshan Iron and Olympic Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maanshan Iron 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.| Maanshan Iron vs. Olympic Steel | Maanshan Iron vs. Mesabi Trust | Maanshan Iron vs. Universal Stainless Alloy | Maanshan Iron 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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