Correlation Between United States and Osaka Steel

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

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

Diversification Opportunities for United States and Osaka Steel

0.02

Correlation Coefficient

United States  Osaka Steel

Significant diversification

The 3 months correlation between United and Osaka is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel 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 United States 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 United States Steel 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 United States i.e., United States and Osaka Steel go up and down completely randomly.

Pair Corralation between United States and Osaka Steel

Taking into account the 90-day investment horizon United States Steel is expected to under-perform the Osaka Steel. In addition to that, United States is 36.15 times more volatile than Osaka Steel Co,. It trades about -0.03 of its total potential returns per unit of risk. Osaka Steel Co, is currently generating about 0.09 per unit of volatility. If you would invest  1,010  in Osaka Steel Co, on September 29, 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 Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

United States Steel  vs.  Osaka Steel Co,

United States Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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

Pair Trading with United States and Osaka Steel

The main advantage of trading using opposite United States and Osaka Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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 United States Steel 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.