Correlation Between Olympic Steel and CORNING

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Can any of the company-specific risk be diversified away by investing in both Olympic Steel and CORNING 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 CORNING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Olympic Steel and CORNING INC 585, you can compare the effects of market volatilities on Olympic Steel and CORNING 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 CORNING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olympic Steel and CORNING.

Diversification Opportunities for Olympic Steel and CORNING

-0.44
  Correlation Coefficient

Very good diversification

The 3 months correlation between Olympic and CORNING is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Steel and CORNING INC 585 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CORNING INC 585 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 CORNING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CORNING INC 585 has no effect on the direction of Olympic Steel i.e., Olympic Steel and CORNING go up and down completely randomly.

Pair Corralation between Olympic Steel and CORNING

Given the investment horizon of 90 days Olympic Steel is expected to generate 1.81 times more return on investment than CORNING. However, Olympic Steel is 1.81 times more volatile than CORNING INC 585. It trades about 0.02 of its potential returns per unit of risk. CORNING INC 585 is currently generating about -0.01 per unit of risk. If you would invest  4,200  in Olympic Steel on September 12, 2024 and sell it today you would earn a total of  12.00  from holding Olympic Steel or generate 0.29% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy80.95%
ValuesDaily Returns

Olympic Steel  vs.  CORNING INC 585

 Performance 
       Timeline  
Olympic Steel 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Olympic Steel are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Olympic Steel unveiled solid returns over the last few months and may actually be approaching a breakup point.
CORNING INC 585 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CORNING INC 585 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CORNING INC 585 investors.

Olympic Steel and CORNING Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Olympic Steel and CORNING

The main advantage of trading using opposite Olympic Steel and CORNING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olympic Steel position performs unexpectedly, CORNING 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 CORNING will offset losses from the drop in CORNING's long position.
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The idea behind Olympic Steel and CORNING INC 585 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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