Correlation Between Ivanhoe Electric and Osaka Steel

Can any of the company-specific risk be diversified away by investing in both Ivanhoe Electric and Osaka 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 Ivanhoe Electric and Osaka Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ivanhoe Electric and Osaka Steel Co,, you can compare the effects of market volatilities on Ivanhoe Electric and Osaka 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 Ivanhoe Electric with a short position of Osaka Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ivanhoe Electric and Osaka Steel.

Diversification Opportunities for Ivanhoe Electric and Osaka Steel

0.72

Correlation Coefficient

Ivanhoe Electric  Osaka Steel

Poor diversification

The 3 months correlation between Ivanhoe and Osaka is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Electric and Osaka Steel Co, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Osaka Steel Co, and Ivanhoe Electric 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 Ivanhoe Electric are associated (or correlated) with Osaka Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Osaka Steel Co, has no effect on the direction of Ivanhoe Electric i.e., Ivanhoe Electric and Osaka Steel go up and down completely randomly.

Pair Corralation between Ivanhoe Electric and Osaka Steel

Allowing for the 90-day total investment horizon Ivanhoe Electric is expected to generate 32.12 times more return on investment than Osaka Steel. However, Ivanhoe Electric is 32.12 times more volatile than Osaka Steel Co,. It trades about 0.06 of its potential returns per unit of risk. Osaka Steel Co, is currently generating about 0.13 per unit of risk. If you would invest  775.00  in Ivanhoe Electric on September 13, 2024 and sell it today you would earn a total of  76.00  from holding Ivanhoe Electric or generate 9.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Ivanhoe Electric  vs.  Osaka Steel Co,

Ivanhoe Electric

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ivanhoe Electric are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Ivanhoe Electric exhibited solid returns over the last few months and may actually be approaching a breakup point.

Osaka Steel Co,

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Osaka Steel Co, are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Osaka Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ivanhoe Electric and Osaka Steel

The main advantage of trading using opposite Ivanhoe Electric and Osaka Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ivanhoe Electric position performs unexpectedly, Osaka 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 Osaka Steel will offset losses from the drop in Osaka Steel's long position.

The idea behind Ivanhoe Electric and Osaka Steel Co, 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..