Correlation Between Olympic Steel and RH
Can any of the company-specific risk be diversified away by investing in both Olympic Steel and RH 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 RH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Olympic Steel and RH, you can compare the effects of market volatilities on Olympic Steel and RH 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 RH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olympic Steel and RH.
Diversification Opportunities for Olympic Steel and RH
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Olympic and RH is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Steel and RH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RH 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 RH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RH has no effect on the direction of Olympic Steel i.e., Olympic Steel and RH go up and down completely randomly.
Pair Corralation between Olympic Steel and RH
Given the investment horizon of 90 days Olympic Steel is expected to generate 0.84 times more return on investment than RH. However, Olympic Steel is 1.19 times less risky than RH. It trades about 0.2 of its potential returns per unit of risk. RH is currently generating about 0.14 per unit of risk. If you would invest 3,198 in Olympic Steel on November 3, 2024 and sell it today you would earn a total of 249.00 from holding Olympic Steel or generate 7.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Olympic Steel vs. RH
Performance |
| Timeline |
| Olympic Steel |
| RH |
Olympic Steel and RH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Olympic Steel and RH
The main advantage of trading using opposite Olympic Steel and RH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olympic Steel position performs unexpectedly, RH 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 RH will offset losses from the drop in RH's long position.| Olympic Steel vs. Outokumpu Oyj ADR | Olympic Steel vs. Usinas Siderurgicas de | Olympic Steel vs. POSCO Holdings | Olympic Steel vs. Steel Dynamics |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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