Correlation Between Olympic Steel and Aperam PK

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

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

Diversification Opportunities for Olympic Steel and Aperam PK

0.55

Correlation Coefficient

Olympic Steel  Aperam PK

Very weak diversification

The 3 months correlation between Olympic and Aperam is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Steel and Aperam PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aperam PK and Olympic 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 Olympic Steel are associated (or correlated) with Aperam PK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aperam PK has no effect on the direction of Olympic Steel i.e., Olympic Steel and Aperam PK go up and down completely randomly.

Pair Corralation between Olympic Steel and Aperam PK

Given the investment horizon of 90 days Olympic Steel is expected to generate 0.89 times more return on investment than Aperam PK. However, Olympic Steel is 1.12 times less risky than Aperam PK. It trades about 0.01 of its potential returns per unit of risk. Aperam PK is currently generating about 0.0 per unit of risk. If you would invest  3,288  in Olympic Steel on September 28, 2024 and sell it today you would earn a total of  55.00  from holding Olympic Steel or generate 1.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.54%
Values	Daily Returns

Olympic Steel  vs.  Aperam PK

Olympic Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Olympic Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Aperam PK

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Olympic Steel and Aperam PK

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

The idea behind Olympic Steel and Aperam PK 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.