Correlation Between Olympic Steel and Alpha One
Can any of the company-specific risk be diversified away by investing in both Olympic Steel and Alpha One 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 Alpha One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Olympic Steel and Alpha One, you can compare the effects of market volatilities on Olympic Steel and Alpha One 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 Alpha One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olympic Steel and Alpha One.
Diversification Opportunities for Olympic Steel and Alpha One
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Olympic and Alpha is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Steel and Alpha One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha One 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 Alpha One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha One has no effect on the direction of Olympic Steel i.e., Olympic Steel and Alpha One go up and down completely randomly.
Pair Corralation between Olympic Steel and Alpha One
Given the investment horizon of 90 days Olympic Steel is expected to generate 0.23 times more return on investment than Alpha One. However, Olympic Steel is 4.36 times less risky than Alpha One. It trades about -0.69 of its potential returns per unit of risk. Alpha One is currently generating about -0.21 per unit of risk. If you would invest 3,967 in Olympic Steel on October 14, 2024 and sell it today you would lose (887.00) from holding Olympic Steel or give up 22.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
Olympic Steel vs. Alpha One
Performance |
| Timeline |
| Olympic Steel |
| Alpha One |
Olympic Steel and Alpha One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Olympic Steel and Alpha One
The main advantage of trading using opposite Olympic Steel and Alpha One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olympic Steel position performs unexpectedly, Alpha One 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 Alpha One will offset losses from the drop in Alpha One'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 |
| Alpha One vs. SNDL Inc | Alpha One vs. Fomento Economico Mexicano | Alpha One vs. Olympic Steel | Alpha One vs. ReTo Eco Solutions |
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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