Correlation Between Osaka Steel and EvoAir Holdings

Can any of the company-specific risk be diversified away by investing in both Osaka Steel and EvoAir Holdings 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 EvoAir Holdings 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 EvoAir Holdings, you can compare the effects of market volatilities on Osaka Steel and EvoAir Holdings 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 EvoAir Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Osaka Steel and EvoAir Holdings.

Diversification Opportunities for Osaka Steel and EvoAir Holdings

0.0

Correlation Coefficient

Osaka Steel  EvoAir Holdings

Pay attention - limited upside

The 3 months correlation between Osaka and EvoAir is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Osaka Steel Co, and EvoAir Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EvoAir Holdings 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 EvoAir Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EvoAir Holdings has no effect on the direction of Osaka Steel i.e., Osaka Steel and EvoAir Holdings go up and down completely randomly.

Pair Corralation between Osaka Steel and EvoAir Holdings

Assuming the 90 days horizon Osaka Steel is expected to generate 2.59 times less return on investment than EvoAir Holdings. But when comparing it to its historical volatility, Osaka Steel Co, is 3.6 times less risky than EvoAir Holdings. It trades about 0.06 of its potential returns per unit of risk. EvoAir Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,204  in EvoAir Holdings on September 24, 2024 and sell it today you would earn a total of  96.00  from holding EvoAir Holdings or generate 4.36% return on investment over 90 days.

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

Osaka Steel Co,  vs.  EvoAir Holdings

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 recent stock price disturbance, may contribute to mid-run losses for the stockholders.

EvoAir Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EvoAir Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, EvoAir Holdings is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Osaka Steel and EvoAir Holdings

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

The idea behind Osaka Steel Co, and EvoAir Holdings 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.