Correlation Between Sealed Air and Osaka Steel

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

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

Diversification Opportunities for Sealed Air and Osaka Steel

0.34

Correlation Coefficient

Sealed Air  Osaka Steel

Weak diversification

The 3 months correlation between Sealed and Osaka is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air 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 Sealed Air 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 Sealed Air 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 Sealed Air i.e., Sealed Air and Osaka Steel go up and down completely randomly.

Pair Corralation between Sealed Air and Osaka Steel

Considering the 90-day investment horizon Sealed Air is expected to generate 23.05 times more return on investment than Osaka Steel. However, Sealed Air is 23.05 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 0.08 per unit of risk. If you would invest  3,113  in Sealed Air on September 18, 2024 and sell it today you would earn a total of  470.00  from holding Sealed Air or generate 15.1% return on investment over 90 days.

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

Sealed Air  vs.  Osaka Steel Co,

Sealed Air

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sealed Air are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Sealed Air is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 Sealed Air and Osaka Steel

The main advantage of trading using opposite Sealed Air and Osaka Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air 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 Sealed Air 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.