Correlation Between Olympic Steel and Aldel Financial
Can any of the company-specific risk be diversified away by investing in both Olympic Steel and Aldel Financial 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 Olympic Steel and Aldel Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Olympic Steel and Aldel Financial II, you can compare the effects of market volatilities on Olympic Steel and Aldel Financial 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 Olympic Steel with a short position of Aldel Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olympic Steel and Aldel Financial.
Diversification Opportunities for Olympic Steel and Aldel Financial
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Olympic and Aldel is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Steel and Aldel Financial II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aldel Financial II and Olympic Steel 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 Olympic Steel are associated (or correlated) with Aldel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aldel Financial II has no effect on the direction of Olympic Steel i.e., Olympic Steel and Aldel Financial go up and down completely randomly.
Pair Corralation between Olympic Steel and Aldel Financial
Given the investment horizon of 90 days Olympic Steel is expected to generate 34.12 times more return on investment than Aldel Financial. However, Olympic Steel is 34.12 times more volatile than Aldel Financial II. It trades about 0.21 of its potential returns per unit of risk. Aldel Financial II is currently generating about 0.0 per unit of risk. If you would invest 3,638 in Olympic Steel on August 31, 2024 and sell it today you would earn a total of 593.00 from holding Olympic Steel or generate 16.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Olympic Steel vs. Aldel Financial II
Performance |
| Timeline |
| Olympic Steel |
| Aldel Financial II |
Olympic Steel and Aldel Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Olympic Steel and Aldel Financial
The main advantage of trading using opposite Olympic Steel and Aldel Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olympic Steel position performs unexpectedly, Aldel Financial 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 Aldel Financial will offset losses from the drop in Aldel Financial's long position.| Olympic Steel vs. Universal Stainless Alloy | Olympic Steel vs. Outokumpu Oyj ADR | Olympic Steel vs. Usinas Siderurgicas de | Olympic Steel vs. POSCO Holdings |
| Aldel Financial vs. RBC Bearings Incorporated | Aldel Financial vs. CECO Environmental Corp | Aldel Financial vs. EMCOR Group | Aldel Financial vs. Simpson Manufacturing |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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