Correlation Between Osaka Steel and Telecom

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Can any of the company-specific risk be diversified away by investing in both Osaka Steel and Telecom 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 Osaka Steel and Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Osaka Steel Co, and Telecom Italia Capital, you can compare the effects of market volatilities on Osaka Steel and Telecom 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 Osaka Steel with a short position of Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Osaka Steel and Telecom.

Diversification Opportunities for Osaka Steel and Telecom

-0.37
  Correlation Coefficient

Very good diversification

The 3 months correlation between Osaka and Telecom is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Osaka Steel Co, and Telecom Italia Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Italia Capital and Osaka Steel 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 Osaka Steel Co, are associated (or correlated) with Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecom Italia Capital has no effect on the direction of Osaka Steel i.e., Osaka Steel and Telecom go up and down completely randomly.

Pair Corralation between Osaka Steel and Telecom

Assuming the 90 days horizon Osaka Steel Co, is expected to generate 0.05 times more return on investment than Telecom. However, Osaka Steel Co, is 20.73 times less risky than Telecom. It trades about 0.06 of its potential returns per unit of risk. Telecom Italia Capital is currently generating about -0.03 per unit of risk. If you would invest  1,010  in Osaka Steel Co, on September 14, 2024 and sell it today you would earn a total of  10.00  from holding Osaka Steel Co, or generate 0.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.19%
ValuesDaily Returns

Osaka Steel Co,  vs.  Telecom Italia Capital

 Performance 
       Timeline  
Osaka Steel Co, 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Osaka Steel Co, are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Osaka Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
Telecom Italia Capital 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Telecom Italia Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for Telecom Italia Capital investors.

Osaka Steel and Telecom Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Osaka Steel and Telecom

The main advantage of trading using opposite Osaka Steel and Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Osaka Steel position performs unexpectedly, Telecom 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 Telecom will offset losses from the drop in Telecom's long position.
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The idea behind Osaka Steel Co, and Telecom Italia Capital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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