Correlation Between OCI NV and Aperam SA

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

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

Diversification Opportunities for OCI NV and Aperam SA

0.12

Correlation Coefficient

OCI NV  Aperam SA

Average diversification

The 3 months correlation between OCI and Aperam is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding OCI NV and Aperam SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aperam SA and OCI NV 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 OCI NV are associated (or correlated) with Aperam SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aperam SA has no effect on the direction of OCI NV i.e., OCI NV and Aperam SA go up and down completely randomly.

Pair Corralation between OCI NV and Aperam SA

Assuming the 90 days trading horizon OCI NV is expected to under-perform the Aperam SA. But the stock apears to be less risky and, when comparing its historical volatility, OCI NV is 1.31 times less risky than Aperam SA. The stock trades about -0.04 of its potential returns per unit of risk. The Aperam SA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,541  in Aperam SA on September 25, 2024 and sell it today you would lose (55.00) from holding Aperam SA or give up 2.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

OCI NV  vs.  Aperam SA

OCI NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OCI NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, OCI NV is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Aperam SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aperam SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Aperam SA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with OCI NV and Aperam SA

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

The idea behind OCI NV and Aperam SA 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.