Correlation Between Olympic Steel and 00108WAN0

Can any of the company-specific risk be diversified away by investing in both Olympic Steel and 00108WAN0 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 00108WAN0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Olympic Steel and AEP 345 15 MAY 51, you can compare the effects of market volatilities on Olympic Steel and 00108WAN0 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 00108WAN0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olympic Steel and 00108WAN0.

Diversification Opportunities for Olympic Steel and 00108WAN0

0.22

Correlation Coefficient

Olympic Steel  00108WAN0

Modest diversification

The 3 months correlation between Olympic and 00108WAN0 is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Olympic Steel and AEP 345 15 MAY 51 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEP 345 15 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 00108WAN0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEP 345 15 has no effect on the direction of Olympic Steel i.e., Olympic Steel and 00108WAN0 go up and down completely randomly.

Pair Corralation between Olympic Steel and 00108WAN0

Given the investment horizon of 90 days Olympic Steel is expected to under-perform the 00108WAN0. In addition to that, Olympic Steel is 1.6 times more volatile than AEP 345 15 MAY 51. It trades about -0.11 of its total potential returns per unit of risk. AEP 345 15 MAY 51 is currently generating about -0.06 per unit of volatility. If you would invest  7,037  in AEP 345 15 MAY 51 on October 12, 2024 and sell it today you would lose (396.00) from holding AEP 345 15 MAY 51 or give up 5.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	73.77%
Values	Daily Returns

Olympic Steel  vs.  AEP 345 15 MAY 51

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.

AEP 345 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AEP 345 15 MAY 51 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for AEP 345 15 MAY 51 investors.

Pair Trading with Olympic Steel and 00108WAN0

The main advantage of trading using opposite Olympic Steel and 00108WAN0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olympic Steel position performs unexpectedly, 00108WAN0 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 00108WAN0 will offset losses from the drop in 00108WAN0's long position.

The idea behind Olympic Steel and AEP 345 15 MAY 51 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.