Correlation Between Olympic Steel and POSCO Holdings
Can any of the company-specific risk be diversified away by investing in both Olympic Steel and POSCO Holdings 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 Olympic Steel and POSCO Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Olympic Steel and POSCO Holdings, you can compare the effects of market volatilities on Olympic Steel and POSCO Holdings 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 Olympic Steel with a short position of POSCO Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olympic Steel and POSCO Holdings.
Diversification Opportunities for Olympic Steel and POSCO Holdings
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Olympic and POSCO is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Steel and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings and Olympic 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 Olympic Steel are associated (or correlated) with POSCO Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSCO Holdings has no effect on the direction of Olympic Steel i.e., Olympic Steel and POSCO Holdings go up and down completely randomly.
Pair Corralation between Olympic Steel and POSCO Holdings
Assuming the 90 days trading horizon Olympic Steel is expected to generate 1.04 times more return on investment than POSCO Holdings. However, Olympic Steel is 1.04 times more volatile than POSCO Holdings. It trades about 0.0 of its potential returns per unit of risk. POSCO Holdings is currently generating about -0.11 per unit of risk. If you would invest 3,606 in Olympic Steel on November 2, 2024 and sell it today you would lose (146.00) from holding Olympic Steel or give up 4.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Olympic Steel vs. POSCO Holdings
Performance |
| Timeline |
| Olympic Steel |
| POSCO Holdings |
Olympic Steel and POSCO Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Olympic Steel and POSCO Holdings
The main advantage of trading using opposite Olympic Steel and POSCO Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olympic Steel position performs unexpectedly, POSCO Holdings 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 POSCO Holdings will offset losses from the drop in POSCO Holdings' long position.| Olympic Steel vs. Brockhaus Capital Management | Olympic Steel vs. Jupiter Fund Management | Olympic Steel vs. ANTA SPORTS PRODUCT | Olympic Steel vs. Gaming and Leisure |
| POSCO Holdings vs. MidCap Financial Investment | POSCO Holdings vs. ECHO INVESTMENT ZY | POSCO Holdings vs. SLR Investment Corp | POSCO Holdings vs. CDL INVESTMENT |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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