Correlation Between Kaltura and Olympic Steel

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

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

Diversification Opportunities for Kaltura and Olympic Steel

0.57

Correlation Coefficient

Kaltura  Olympic Steel

Very weak diversification

The 3 months correlation between Kaltura and Olympic is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Kaltura and Olympic Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Steel and Kaltura 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 Kaltura 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 Kaltura i.e., Kaltura and Olympic Steel go up and down completely randomly.

Pair Corralation between Kaltura and Olympic Steel

Given the investment horizon of 90 days Kaltura is expected to generate 1.66 times more return on investment than Olympic Steel. However, Kaltura is 1.66 times more volatile than Olympic Steel. It trades about 0.2 of its potential returns per unit of risk. Olympic Steel is currently generating about -0.04 per unit of risk. If you would invest  136.00  in Kaltura on September 23, 2024 and sell it today you would earn a total of  98.00  from holding Kaltura or generate 72.06% return on investment over 90 days.

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

Kaltura  vs.  Olympic Steel

Kaltura

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kaltura are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Kaltura reported solid returns over the last few months and may actually be approaching a breakup point.

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 Kaltura and Olympic Steel

The main advantage of trading using opposite Kaltura and Olympic Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaltura 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 Kaltura 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.