Correlation Between Olympic Steel and SNDL

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

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

Diversification Opportunities for Olympic Steel and SNDL

0.29

Correlation Coefficient

Olympic Steel  SNDL

Modest diversification

The 3 months correlation between Olympic and SNDL is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Steel and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc 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 SNDL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNDL Inc has no effect on the direction of Olympic Steel i.e., Olympic Steel and SNDL go up and down completely randomly.

Pair Corralation between Olympic Steel and SNDL

Given the investment horizon of 90 days Olympic Steel is expected to generate 0.95 times more return on investment than SNDL. However, Olympic Steel is 1.05 times less risky than SNDL. It trades about 0.02 of its potential returns per unit of risk. SNDL Inc is currently generating about -0.1 per unit of risk. If you would invest  3,250  in Olympic Steel on December 27, 2024 and sell it today you would earn a total of  14.00  from holding Olympic Steel or generate 0.43% return on investment over 90 days.

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

Olympic Steel  vs.  SNDL Inc

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.

SNDL Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days SNDL Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Olympic Steel and SNDL

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

The idea behind Olympic Steel and SNDL Inc 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.