Correlation Between Neo Performance and Olin

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

By analyzing existing cross correlation between Neo Performance Materials and Olin Corporation, you can compare the effects of market volatilities on Neo Performance and Olin 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 Neo Performance with a short position of Olin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neo Performance and Olin.

Diversification Opportunities for Neo Performance and Olin

0.55

Correlation Coefficient

Neo Performance  Olin

Very weak diversification

The 3 months correlation between Neo and Olin is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Neo Performance Materials and Olin Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olin and Neo Performance 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 Neo Performance Materials are associated (or correlated) with Olin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olin has no effect on the direction of Neo Performance i.e., Neo Performance and Olin go up and down completely randomly.

Pair Corralation between Neo Performance and Olin

Assuming the 90 days horizon Neo Performance Materials is expected to under-perform the Olin. But the pink sheet apears to be less risky and, when comparing its historical volatility, Neo Performance Materials is 1.24 times less risky than Olin. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Olin Corporation is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,194  in Olin Corporation on September 2, 2024 and sell it today you would earn a total of  65.00  from holding Olin Corporation or generate 1.55% return on investment over 90 days.

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

Neo Performance Materials  vs.  Olin Corp.

Neo Performance Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neo Performance Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Neo Performance is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Olin

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Olin Corporation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, Olin is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Neo Performance and Olin

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

The idea behind Neo Performance Materials and Olin Corporation 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.