Correlation Between Osaka Steel and Allegheny Technologies

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

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

Diversification Opportunities for Osaka Steel and Allegheny Technologies

-0.3

Correlation Coefficient

Osaka Steel  Allegheny Technologies

Very good diversification

The 3 months correlation between Osaka and Allegheny is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Osaka Steel Co, and Allegheny Technologies Incorpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegheny Technologies and Osaka 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 Osaka Steel Co, are associated (or correlated) with Allegheny Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegheny Technologies has no effect on the direction of Osaka Steel i.e., Osaka Steel and Allegheny Technologies go up and down completely randomly.

Pair Corralation between Osaka Steel and Allegheny Technologies

Assuming the 90 days horizon Osaka Steel Co, is expected to generate 0.05 times more return on investment than Allegheny Technologies. However, Osaka Steel Co, is 18.99 times less risky than Allegheny Technologies. It trades about 0.11 of its potential returns per unit of risk. Allegheny Technologies Incorporated is currently generating about -0.04 per unit of risk. If you would invest  1,010  in Osaka Steel Co, on October 3, 2024 and sell it today you would earn a total of  10.00  from holding Osaka Steel Co, or generate 0.99% return on investment over 90 days.

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

Osaka Steel Co,  vs.  Allegheny Technologies Incorpo

Osaka Steel Co,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Osaka Steel Co, has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Allegheny Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allegheny Technologies Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Osaka Steel and Allegheny Technologies

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

The idea behind Osaka Steel Co, and Allegheny Technologies Incorporated 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.