Correlation Between Park Ohio and Olympic Steel
Can any of the company-specific risk be diversified away by investing in both Park Ohio 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 Park Ohio and Olympic Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Ohio Holdings and Olympic Steel, you can compare the effects of market volatilities on Park Ohio 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 Park Ohio with a short position of Olympic Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Ohio and Olympic Steel.
Diversification Opportunities for Park Ohio and Olympic Steel
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Park and Olympic is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Park Ohio Holdings and Olympic Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Steel and Park Ohio 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 Park Ohio Holdings 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 Park Ohio i.e., Park Ohio and Olympic Steel go up and down completely randomly.
Pair Corralation between Park Ohio and Olympic Steel
Given the investment horizon of 90 days Park Ohio is expected to generate 1.28 times less return on investment than Olympic Steel. In addition to that, Park Ohio is 1.0 times more volatile than Olympic Steel. It trades about 0.18 of its total potential returns per unit of risk. Olympic Steel is currently generating about 0.23 per unit of volatility. If you would invest 3,588 in Olympic Steel on September 1, 2024 and sell it today you would earn a total of 640.00 from holding Olympic Steel or generate 17.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Ohio Holdings vs. Olympic Steel
Performance |
| Timeline |
| Park Ohio Holdings |
| Olympic Steel |
Park Ohio and Olympic Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Ohio and Olympic Steel
The main advantage of trading using opposite Park Ohio and Olympic Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Ohio 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.| Park Ohio vs. Hurco Companies | Park Ohio vs. Enerpac Tool Group | Park Ohio vs. China Yuchai International | Park Ohio vs. Luxfer Holdings PLC |
| Olympic Steel vs. Fortitude Gold Corp | Olympic Steel vs. New Gold | Olympic Steel vs. Galiano Gold | Olympic Steel vs. GoldMining |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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