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

0.47

Correlation Coefficient

Olympic Steel  Aris Mining

Very weak diversification

The 3 months correlation between Olympic and Aris is 0.47. 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 under-perform the Aris Mining. But the stock apears to be less risky and, when comparing its historical volatility, Olympic Steel is 1.15 times less risky than Aris Mining. The stock trades about -0.15 of its potential returns per unit of risk. The Aris Mining is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  366.00  in Aris Mining on December 2, 2024 and sell it today you would earn a total of  4.00  from holding Aris Mining or generate 1.09% return on investment over 90 days.

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

Olympic Steel  vs.  Aris Mining

Olympic Steel

Risk-Adjusted Performance

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 April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Aris Mining

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aris Mining are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Aris Mining is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .