Correlation Between Companhia Siderurgica and Olympic Steel
Can any of the company-specific risk be diversified away by investing in both Companhia Siderurgica 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 Companhia Siderurgica and Olympic Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Companhia Siderurgica Nacional and Olympic Steel, you can compare the effects of market volatilities on Companhia Siderurgica 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 Companhia Siderurgica with a short position of Olympic Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Siderurgica and Olympic Steel.
Diversification Opportunities for Companhia Siderurgica and Olympic Steel
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Companhia and Olympic is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Siderurgica Nacional and Olympic Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Steel and Companhia Siderurgica 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 Companhia Siderurgica Nacional 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 Companhia Siderurgica i.e., Companhia Siderurgica and Olympic Steel go up and down completely randomly.
Pair Corralation between Companhia Siderurgica and Olympic Steel
Considering the 90-day investment horizon Companhia Siderurgica Nacional is expected to under-perform the Olympic Steel. In addition to that, Companhia Siderurgica is 1.08 times more volatile than Olympic Steel. It trades about -0.08 of its total potential returns per unit of risk. Olympic Steel is currently generating about -0.07 per unit of volatility. If you would invest 6,380 in Olympic Steel on November 9, 2024 and sell it today you would lose (2,876) from holding Olympic Steel or give up 45.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia Siderurgica Nacional vs. Olympic Steel
Performance |
| Timeline |
| Companhia Siderurgica |
| Olympic Steel |
Companhia Siderurgica and Olympic Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Siderurgica and Olympic Steel
The main advantage of trading using opposite Companhia Siderurgica and Olympic Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Siderurgica 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.| Companhia Siderurgica vs. Ternium SA ADR | Companhia Siderurgica vs. ArcelorMittal SA ADR | Companhia Siderurgica vs. Commercial Metals | Companhia Siderurgica vs. Outokumpu Oyj ADR |
| Olympic Steel vs. Outokumpu Oyj ADR | Olympic Steel vs. Usinas Siderurgicas de | Olympic Steel vs. POSCO Holdings | Olympic Steel vs. Steel Dynamics |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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