Correlation Between Olympic Steel and YTLBerhad

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

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

Diversification Opportunities for Olympic Steel and YTLBerhad

-0.22

Correlation Coefficient

Olympic Steel  YTLBerhad

Very good diversification

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

Pair Corralation between Olympic Steel and YTLBerhad

Given the investment horizon of 90 days Olympic Steel is expected to generate 0.82 times more return on investment than YTLBerhad. However, Olympic Steel is 1.22 times less risky than YTLBerhad. It trades about 0.09 of its potential returns per unit of risk. YTL Berhad is currently generating about -0.13 per unit of risk. If you would invest  3,718  in Olympic Steel on September 4, 2024 and sell it today you would earn a total of  565.00  from holding Olympic Steel or generate 15.2% 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.  YTL Berhad

Olympic Steel

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Olympic Steel are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Olympic Steel unveiled solid returns over the last few months and may actually be approaching a breakup point.

YTL Berhad

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days YTL Berhad 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 nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Olympic Steel and YTLBerhad

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

The idea behind Olympic Steel and YTL Berhad 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.