Correlation Between Olympic Steel and Aris Mining

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

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

Diversification Opportunities for Olympic Steel and Aris Mining

-0.1

Correlation Coefficient

Olympic Steel  Aris Mining

Good diversification

The 3 months correlation between Olympic and Aris is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Steel and Aris Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aris Mining 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 Aris Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aris Mining has no effect on the direction of Olympic Steel i.e., Olympic Steel and Aris Mining go up and down completely randomly.

Pair Corralation between Olympic Steel and Aris Mining

Given the investment horizon of 90 days Olympic Steel is expected to generate 17.02 times less return on investment than Aris Mining. But when comparing it to its historical volatility, Olympic Steel is 1.18 times less risky than Aris Mining. It trades about 0.01 of its potential returns per unit of risk. Aris Mining is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  340.00  in Aris Mining on December 28, 2024 and sell it today you would earn a total of  127.00  from holding Aris Mining or generate 37.35% return on investment over 90 days.

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

Olympic Steel  vs.  Aris Mining

Olympic Steel

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Olympic Steel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Olympic Steel is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Aris Mining

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aris Mining are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Aris Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Olympic Steel and Aris Mining

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

The idea behind Olympic Steel and Aris Mining 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.