Correlation Between Osaka Steel and Juniata Valley

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

Diversification Opportunities for Osaka Steel and Juniata Valley

0.35

Correlation Coefficient

Osaka Steel  Juniata Valley

Weak diversification

The 3 months correlation between Osaka and Juniata is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Osaka Steel Co, and Juniata Valley Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juniata Valley Financial 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 Juniata Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Juniata Valley Financial has no effect on the direction of Osaka Steel i.e., Osaka Steel and Juniata Valley go up and down completely randomly.

Pair Corralation between Osaka Steel and Juniata Valley

Assuming the 90 days horizon Osaka Steel is expected to generate 18.68 times less return on investment than Juniata Valley. But when comparing it to its historical volatility, Osaka Steel Co, is 42.35 times less risky than Juniata Valley. It trades about 0.06 of its potential returns per unit of risk. Juniata Valley Financial is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,214  in Juniata Valley Financial on September 24, 2024 and sell it today you would earn a total of  111.00  from holding Juniata Valley Financial or generate 9.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.32%
Values	Daily Returns

Osaka Steel Co,  vs.  Juniata Valley Financial

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.

Juniata Valley Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Juniata Valley Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Juniata Valley reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Osaka Steel and Juniata Valley

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

The idea behind Osaka Steel Co, and Juniata Valley Financial 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.