Correlation Between Olympic Circuit and Bengang Steel

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

Diversification Opportunities for Olympic Circuit and Bengang Steel

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Olympic and Bengang is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Circuit Technology and Bengang Steel Plates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bengang Steel Plates and Olympic Circuit 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 Circuit Technology are associated (or correlated) with Bengang Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bengang Steel Plates has no effect on the direction of Olympic Circuit i.e., Olympic Circuit and Bengang Steel go up and down completely randomly.

Pair Corralation between Olympic Circuit and Bengang Steel

Assuming the 90 days trading horizon Olympic Circuit Technology is expected to generate 1.5 times more return on investment than Bengang Steel. However, Olympic Circuit is 1.5 times more volatile than Bengang Steel Plates. It trades about 0.02 of its potential returns per unit of risk. Bengang Steel Plates is currently generating about -0.1 per unit of risk. If you would invest  2,997  in Olympic Circuit Technology on September 28, 2024 and sell it today you would earn a total of  0.00  from holding Olympic Circuit Technology or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Olympic Circuit Technology  vs.  Bengang Steel Plates

 Performance 
       Timeline  
Olympic Circuit Tech 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Olympic Circuit Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Olympic Circuit sustained solid returns over the last few months and may actually be approaching a breakup point.
Bengang Steel Plates 

Risk-Adjusted Performance

0 of 100

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

Olympic Circuit and Bengang Steel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Olympic Circuit and Bengang Steel

The main advantage of trading using opposite Olympic Circuit and Bengang Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olympic Circuit position performs unexpectedly, Bengang Steel 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 Bengang Steel will offset losses from the drop in Bengang Steel's long position.
The idea behind Olympic Circuit Technology and Bengang Steel Plates 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.
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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