Correlation Between Commercial Metals and Osisko Development

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

By analyzing existing cross correlation between Commercial Metals and Osisko Development Corp, you can compare the effects of market volatilities on Commercial Metals and Osisko Development 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 Commercial Metals with a short position of Osisko Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial Metals and Osisko Development.

Diversification Opportunities for Commercial Metals and Osisko Development

-0.62

Correlation Coefficient

Commercial Metals  Osisko Development

Excellent diversification

The 3 months correlation between Commercial and Osisko is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Metals and Osisko Development Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Osisko Development Corp and Commercial Metals 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 Commercial Metals are associated (or correlated) with Osisko Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Osisko Development Corp has no effect on the direction of Commercial Metals i.e., Commercial Metals and Osisko Development go up and down completely randomly.

Pair Corralation between Commercial Metals and Osisko Development

Considering the 90-day investment horizon Commercial Metals is expected to generate 0.42 times more return on investment than Osisko Development. However, Commercial Metals is 2.38 times less risky than Osisko Development. It trades about 0.1 of its potential returns per unit of risk. Osisko Development Corp is currently generating about -0.01 per unit of risk. If you would invest  5,126  in Commercial Metals on September 14, 2024 and sell it today you would earn a total of  735.00  from holding Commercial Metals or generate 14.34% return on investment over 90 days.

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

Commercial Metals  vs.  Osisko Development Corp

Commercial Metals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Commercial Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, Commercial Metals exhibited solid returns over the last few months and may actually be approaching a breakup point.

Osisko Development Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Osisko Development Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Osisko Development is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Commercial Metals and Osisko Development

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

The idea behind Commercial Metals and Osisko Development Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.