Correlation Between Osaka Steel and 539830BX6

Can any of the company-specific risk be diversified away by investing in both Osaka Steel and 539830BX6 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 539830BX6 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 LMT 57 15 NOV 54, you can compare the effects of market volatilities on Osaka Steel and 539830BX6 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 539830BX6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Osaka Steel and 539830BX6.

Diversification Opportunities for Osaka Steel and 539830BX6

-0.7

Correlation Coefficient

Osaka Steel  539830BX6

Excellent diversification

The 3 months correlation between Osaka and 539830BX6 is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Osaka Steel Co, and LMT 57 15 NOV 54 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LMT 57 15 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 539830BX6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LMT 57 15 has no effect on the direction of Osaka Steel i.e., Osaka Steel and 539830BX6 go up and down completely randomly.

Pair Corralation between Osaka Steel and 539830BX6

Assuming the 90 days horizon Osaka Steel Co, is expected to generate 0.13 times more return on investment than 539830BX6. However, Osaka Steel Co, is 7.56 times less risky than 539830BX6. It trades about 0.13 of its potential returns per unit of risk. LMT 57 15 NOV 54 is currently generating about -0.08 per unit of risk. If you would invest  1,010  in Osaka Steel Co, on September 17, 2024 and sell it today you would earn a total of  10.00  from holding Osaka Steel Co, or generate 0.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

Osaka Steel Co,  vs.  LMT 57 15 NOV 54

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.

LMT 57 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LMT 57 15 NOV 54 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 539830BX6 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Osaka Steel and 539830BX6

The main advantage of trading using opposite Osaka Steel and 539830BX6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Osaka Steel position performs unexpectedly, 539830BX6 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 539830BX6 will offset losses from the drop in 539830BX6's long position.

The idea behind Osaka Steel Co, and LMT 57 15 NOV 54 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.