Correlation Between Olympic Steel and Guangzhou

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

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

Diversification Opportunities for Olympic Steel and Guangzhou

-0.08

Correlation Coefficient

Olympic Steel  Guangzhou

Good diversification

The 3 months correlation between Olympic and Guangzhou is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Steel and Guangzhou RF Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou RF Properties 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 Guangzhou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou RF Properties has no effect on the direction of Olympic Steel i.e., Olympic Steel and Guangzhou go up and down completely randomly.

Pair Corralation between Olympic Steel and Guangzhou

If you would invest  23.00  in Guangzhou RF Properties on October 6, 2024 and sell it today you would earn a total of  0.00  from holding Guangzhou RF Properties or generate 0.0% 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.  Guangzhou RF Properties

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

Guangzhou RF Properties

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou RF Properties are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, Guangzhou reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Olympic Steel and Guangzhou

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

The idea behind Olympic Steel and Guangzhou RF Properties 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.