Correlation Between Fortuna Silver and Olympic Steel

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

By analyzing existing cross correlation between Fortuna Silver Mines and Olympic Steel, you can compare the effects of market volatilities on Fortuna Silver and Olympic Steel 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 Fortuna Silver with a short position of Olympic Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortuna Silver and Olympic Steel.

Diversification Opportunities for Fortuna Silver and Olympic Steel

0.01

Correlation Coefficient

Fortuna Silver  Olympic Steel

Significant diversification

The 3 months correlation between Fortuna and Olympic is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Fortuna Silver Mines and Olympic Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Steel and Fortuna Silver 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 Fortuna Silver Mines are associated (or correlated) with Olympic Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olympic Steel has no effect on the direction of Fortuna Silver i.e., Fortuna Silver and Olympic Steel go up and down completely randomly.

Pair Corralation between Fortuna Silver and Olympic Steel

Considering the 90-day investment horizon Fortuna Silver Mines is expected to generate 1.18 times more return on investment than Olympic Steel. However, Fortuna Silver is 1.18 times more volatile than Olympic Steel. It trades about -0.02 of its potential returns per unit of risk. Olympic Steel is currently generating about -0.04 per unit of risk. If you would invest  468.00  in Fortuna Silver Mines on September 23, 2024 and sell it today you would lose (36.00) from holding Fortuna Silver Mines or give up 7.69% of portfolio value over 90 days.

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

Fortuna Silver Mines  vs.  Olympic Steel

Fortuna Silver Mines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortuna Silver Mines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Fortuna Silver is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

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 latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Fortuna Silver and Olympic Steel

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

The idea behind Fortuna Silver Mines and Olympic Steel 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.