Correlation Between MYT Netherlands and Olympic Steel

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

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

Diversification Opportunities for MYT Netherlands and Olympic Steel

-0.65

Correlation Coefficient

MYT Netherlands  Olympic Steel

Excellent diversification

The 3 months correlation between MYT and Olympic is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding MYT Netherlands Parent and Olympic Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Steel and MYT Netherlands 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 MYT Netherlands Parent 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 MYT Netherlands i.e., MYT Netherlands and Olympic Steel go up and down completely randomly.

Pair Corralation between MYT Netherlands and Olympic Steel

Given the investment horizon of 90 days MYT Netherlands Parent is expected to under-perform the Olympic Steel. In addition to that, MYT Netherlands is 1.64 times more volatile than Olympic Steel. It trades about -0.02 of its total potential returns per unit of risk. Olympic Steel is currently generating about 0.07 per unit of volatility. If you would invest  2,699  in Olympic Steel on February 13, 2024 and sell it today you would earn a total of  2,504  from holding Olympic Steel or generate 92.78% return on investment over 90 days.

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

MYT Netherlands Parent  vs.  Olympic Steel

MYT Netherlands Parent

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MYT Netherlands Parent are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, MYT Netherlands exhibited 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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with MYT Netherlands and Olympic Steel

The main advantage of trading using opposite MYT Netherlands and Olympic Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MYT Netherlands 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 MYT Netherlands Parent 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.