Correlation Between Olympic Steel and Tenaris SA
Can any of the company-specific risk be diversified away by investing in both Olympic Steel and Tenaris SA 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 Tenaris SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Olympic Steel and Tenaris SA ADR, you can compare the effects of market volatilities on Olympic Steel and Tenaris SA 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 Tenaris SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olympic Steel and Tenaris SA.
Diversification Opportunities for Olympic Steel and Tenaris SA
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Olympic and Tenaris is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Steel and Tenaris SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenaris SA ADR 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 Tenaris SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenaris SA ADR has no effect on the direction of Olympic Steel i.e., Olympic Steel and Tenaris SA go up and down completely randomly.
Pair Corralation between Olympic Steel and Tenaris SA
Given the investment horizon of 90 days Olympic Steel is expected to generate 1.77 times more return on investment than Tenaris SA. However, Olympic Steel is 1.77 times more volatile than Tenaris SA ADR. It trades about 0.24 of its potential returns per unit of risk. Tenaris SA ADR is currently generating about 0.41 per unit of risk. If you would invest 3,512 in Olympic Steel on September 5, 2024 and sell it today you would earn a total of 675.00 from holding Olympic Steel or generate 19.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Olympic Steel vs. Tenaris SA ADR
Performance |
| Timeline |
| Olympic Steel |
| Tenaris SA ADR |
Olympic Steel and Tenaris SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Olympic Steel and Tenaris SA
The main advantage of trading using opposite Olympic Steel and Tenaris SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olympic Steel position performs unexpectedly, Tenaris SA 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 Tenaris SA will offset losses from the drop in Tenaris SA'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 |
| Tenaris SA vs. Geospace Technologies | Tenaris SA vs. Weatherford International PLC | Tenaris SA vs. Enerflex | Tenaris SA vs. RPC Inc |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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