Correlation Between Olympic Steel and AMCON Distributing
Can any of the company-specific risk be diversified away by investing in both Olympic Steel and AMCON Distributing 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 AMCON Distributing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Olympic Steel and AMCON Distributing, you can compare the effects of market volatilities on Olympic Steel and AMCON Distributing 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 AMCON Distributing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olympic Steel and AMCON Distributing.
Diversification Opportunities for Olympic Steel and AMCON Distributing
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Olympic and AMCON is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Steel and AMCON Distributing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMCON Distributing 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 AMCON Distributing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMCON Distributing has no effect on the direction of Olympic Steel i.e., Olympic Steel and AMCON Distributing go up and down completely randomly.
Pair Corralation between Olympic Steel and AMCON Distributing
Given the investment horizon of 90 days Olympic Steel is expected to generate 0.71 times more return on investment than AMCON Distributing. However, Olympic Steel is 1.41 times less risky than AMCON Distributing. It trades about 0.23 of its potential returns per unit of risk. AMCON Distributing is currently generating about 0.13 per unit of risk. If you would invest 3,588 in Olympic Steel on September 1, 2024 and sell it today you would earn a total of 640.00 from holding Olympic Steel or generate 17.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Olympic Steel vs. AMCON Distributing
Performance |
Timeline |
Olympic Steel |
AMCON Distributing |
Olympic Steel and AMCON Distributing Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Olympic Steel and AMCON Distributing
The main advantage of trading using opposite Olympic Steel and AMCON Distributing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olympic Steel position performs unexpectedly, AMCON Distributing 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 AMCON Distributing will offset losses from the drop in AMCON Distributing's long position.Olympic Steel vs. Fortitude Gold Corp | Olympic Steel vs. New Gold | Olympic Steel vs. Galiano Gold | Olympic Steel vs. GoldMining |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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