Correlation Between Outokumpu Oyj and Ternium SA
Can any of the company-specific risk be diversified away by investing in both Outokumpu Oyj and Ternium SA 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 Outokumpu Oyj and Ternium SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Outokumpu Oyj ADR and Ternium SA ADR, you can compare the effects of market volatilities on Outokumpu Oyj and Ternium SA 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 Outokumpu Oyj with a short position of Ternium SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Outokumpu Oyj and Ternium SA.
Diversification Opportunities for Outokumpu Oyj and Ternium SA
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Outokumpu and Ternium is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Outokumpu Oyj ADR and Ternium SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ternium SA ADR and Outokumpu Oyj 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 Outokumpu Oyj ADR are associated (or correlated) with Ternium SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ternium SA ADR has no effect on the direction of Outokumpu Oyj i.e., Outokumpu Oyj and Ternium SA go up and down completely randomly.
Pair Corralation between Outokumpu Oyj and Ternium SA
Assuming the 90 days horizon Outokumpu Oyj is expected to generate 1.27 times less return on investment than Ternium SA. In addition to that, Outokumpu Oyj is 2.65 times more volatile than Ternium SA ADR. It trades about 0.03 of its total potential returns per unit of risk. Ternium SA ADR is currently generating about 0.09 per unit of volatility. If you would invest 2,929 in Ternium SA ADR on November 3, 2024 and sell it today you would earn a total of 71.00 from holding Ternium SA ADR or generate 2.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Outokumpu Oyj ADR vs. Ternium SA ADR
Performance |
| Timeline |
| Outokumpu Oyj ADR |
| Ternium SA ADR |
Outokumpu Oyj and Ternium SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Outokumpu Oyj and Ternium SA
The main advantage of trading using opposite Outokumpu Oyj and Ternium SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outokumpu Oyj position performs unexpectedly, Ternium SA 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 Ternium SA will offset losses from the drop in Ternium SA's long position.| Outokumpu Oyj vs. Companhia Siderurgica Nacional | Outokumpu Oyj vs. Olympic Steel | Outokumpu Oyj vs. Usinas Siderurgicas de | Outokumpu Oyj vs. POSCO Holdings |
| Ternium SA vs. POSCO Holdings | Ternium SA vs. Steel Dynamics | Ternium SA vs. Gerdau SA ADR | Ternium SA vs. Nucor Corp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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