Correlation Between Olympic Steel and Codexis
Can any of the company-specific risk be diversified away by investing in both Olympic Steel and Codexis 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 Codexis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Olympic Steel and Codexis, you can compare the effects of market volatilities on Olympic Steel and Codexis 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 Codexis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olympic Steel and Codexis.
Diversification Opportunities for Olympic Steel and Codexis
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Olympic and Codexis is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Steel and Codexis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Codexis 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 Codexis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Codexis has no effect on the direction of Olympic Steel i.e., Olympic Steel and Codexis go up and down completely randomly.
Pair Corralation between Olympic Steel and Codexis
Given the investment horizon of 90 days Olympic Steel is expected to generate 1.19 times less return on investment than Codexis. But when comparing it to its historical volatility, Olympic Steel is 2.05 times less risky than Codexis. It trades about 0.03 of its potential returns per unit of risk. Codexis is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 561.00 in Codexis on August 31, 2024 and sell it today you would lose (102.00) from holding Codexis or give up 18.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Olympic Steel vs. Codexis
Performance |
| Timeline |
| Olympic Steel |
| Codexis |
Olympic Steel and Codexis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Olympic Steel and Codexis
The main advantage of trading using opposite Olympic Steel and Codexis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olympic Steel position performs unexpectedly, Codexis 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 Codexis will offset losses from the drop in Codexis' 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 |
| Codexis vs. Nuvation Bio | Codexis vs. Lyell Immunopharma | Codexis vs. Century Therapeutics | Codexis vs. Generation Bio Co |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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