Correlation Between Ternium SA and Outokumpu Oyj
Can any of the company-specific risk be diversified away by investing in both Ternium SA and Outokumpu Oyj 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 Outokumpu Oyj 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 Outokumpu Oyj ADR, you can compare the effects of market volatilities on Ternium SA and Outokumpu Oyj 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 Outokumpu Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ternium SA and Outokumpu Oyj.
Diversification Opportunities for Ternium SA and Outokumpu Oyj
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ternium and Outokumpu is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Ternium SA ADR and Outokumpu Oyj ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outokumpu Oyj ADR 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 Outokumpu Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outokumpu Oyj ADR has no effect on the direction of Ternium SA i.e., Ternium SA and Outokumpu Oyj go up and down completely randomly.
Pair Corralation between Ternium SA and Outokumpu Oyj
Allowing for the 90-day total investment horizon Ternium SA ADR is expected to generate 1.53 times more return on investment than Outokumpu Oyj. However, Ternium SA is 1.53 times more volatile than Outokumpu Oyj ADR. It trades about -0.01 of its potential returns per unit of risk. Outokumpu Oyj ADR is currently generating about -0.24 per unit of risk. If you would invest 3,370 in Ternium SA ADR on August 24, 2024 and sell it today you would lose (32.00) from holding Ternium SA ADR or give up 0.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ternium SA ADR vs. Outokumpu Oyj ADR
Performance |
| Timeline |
| Ternium SA ADR |
| Outokumpu Oyj ADR |
Ternium SA and Outokumpu Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ternium SA and Outokumpu Oyj
The main advantage of trading using opposite Ternium SA and Outokumpu Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ternium SA position performs unexpectedly, Outokumpu Oyj 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 Outokumpu Oyj will offset losses from the drop in Outokumpu Oyj's long position.| Ternium SA vs. POSCO Holdings | Ternium SA vs. Steel Dynamics | Ternium SA vs. Gerdau SA ADR | Ternium SA vs. Nucor Corp |
| Outokumpu Oyj vs. Olympic Steel | Outokumpu Oyj vs. Mesabi Trust | Outokumpu Oyj vs. Universal Stainless Alloy | Outokumpu Oyj vs. POSCO Holdings |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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