Correlation Between Ternium SA and Olin
Can any of the company-specific risk be diversified away by investing in both Ternium SA and Olin 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 Ternium SA and Olin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ternium SA ADR and Olin Corporation, you can compare the effects of market volatilities on Ternium SA and Olin 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 Ternium SA with a short position of Olin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ternium SA and Olin.
Diversification Opportunities for Ternium SA and Olin
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ternium and Olin is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Ternium SA ADR and Olin Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olin and Ternium SA 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 Ternium SA ADR are associated (or correlated) with Olin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olin has no effect on the direction of Ternium SA i.e., Ternium SA and Olin go up and down completely randomly.
Pair Corralation between Ternium SA and Olin
Allowing for the 90-day total investment horizon Ternium SA ADR is expected to under-perform the Olin. But the stock apears to be less risky and, when comparing its historical volatility, Ternium SA ADR is 1.55 times less risky than Olin. The stock trades about -0.02 of its potential returns per unit of risk. The Olin Corporation is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,343 in Olin Corporation on October 20, 2024 and sell it today you would earn a total of 34.00 from holding Olin Corporation or generate 1.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ternium SA ADR vs. Olin Corp.
Performance |
| Timeline |
| Ternium SA ADR |
| Olin |
Ternium SA and Olin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ternium SA and Olin
The main advantage of trading using opposite Ternium SA and Olin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ternium SA position performs unexpectedly, Olin 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 Olin will offset losses from the drop in Olin's long position.| Ternium SA vs. United States Steel | Ternium SA vs. First Majestic Silver | Ternium SA vs. AngloGold Ashanti plc | Ternium SA vs. Celanese |
| Olin vs. Select Energy Services | Olin vs. Westlake Chemical | Olin vs. Sensient Technologies | Olin vs. Axalta Coating Systems |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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