Correlation Between Ternium SA and Olympic Steel
Can any of the company-specific risk be diversified away by investing in both Ternium SA 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 Ternium SA and Olympic Steel 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 Olympic Steel, you can compare the effects of market volatilities on Ternium SA 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 Ternium SA with a short position of Olympic Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ternium SA and Olympic Steel.
Diversification Opportunities for Ternium SA and Olympic Steel
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ternium and Olympic is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ternium SA ADR and Olympic Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Steel 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 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 Ternium SA i.e., Ternium SA and Olympic Steel go up and down completely randomly.
Pair Corralation between Ternium SA and Olympic Steel
Allowing for the 90-day total investment horizon Ternium SA ADR is expected to under-perform the Olympic Steel. But the stock apears to be less risky and, when comparing its historical volatility, Ternium SA ADR is 1.52 times less risky than Olympic Steel. The stock trades about -0.01 of its potential returns per unit of risk. The Olympic Steel is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 4,155 in Olympic Steel on October 19, 2024 and sell it today you would lose (783.00) from holding Olympic Steel or give up 18.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ternium SA ADR vs. Olympic Steel
Performance |
| Timeline |
| Ternium SA ADR |
| Olympic Steel |
Ternium SA and Olympic Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ternium SA and Olympic Steel
The main advantage of trading using opposite Ternium SA and Olympic Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ternium SA 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.| Ternium SA vs. POSCO Holdings | Ternium SA vs. Steel Dynamics | Ternium SA vs. Gerdau SA ADR | Ternium SA vs. Nucor Corp |
| Olympic Steel vs. Universal Stainless Alloy | Olympic Steel vs. Outokumpu Oyj ADR | Olympic Steel vs. Usinas Siderurgicas de | Olympic Steel 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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