Correlation Between Osaka Steel and Hawkins

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

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

Diversification Opportunities for Osaka Steel and Hawkins

0.33

Correlation Coefficient

Osaka Steel  Hawkins

Weak diversification

The 3 months correlation between Osaka and Hawkins is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Osaka Steel Co, and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins and Osaka 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 Osaka Steel Co, are associated (or correlated) with Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of Osaka Steel i.e., Osaka Steel and Hawkins go up and down completely randomly.

Pair Corralation between Osaka Steel and Hawkins

Assuming the 90 days horizon Osaka Steel is expected to generate 83.71 times less return on investment than Hawkins. But when comparing it to its historical volatility, Osaka Steel Co, is 43.14 times less risky than Hawkins. It trades about 0.06 of its potential returns per unit of risk. Hawkins is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  3,844  in Hawkins on September 13, 2024 and sell it today you would earn a total of  9,857  from holding Hawkins or generate 256.43% return on investment over 90 days.

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

Osaka Steel Co,  vs.  Hawkins

Osaka Steel Co,

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Osaka Steel Co, are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Osaka Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Hawkins

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hawkins are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward-looking signals, Hawkins displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Osaka Steel and Hawkins

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

The idea behind Osaka Steel Co, and Hawkins 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.

Check out your portfolio center.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.