Correlation Between GEELY AUTOMOBILE and Reliance Steel
Can any of the company-specific risk be diversified away by investing in both GEELY AUTOMOBILE and Reliance 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 GEELY AUTOMOBILE and Reliance Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEELY AUTOMOBILE and Reliance Steel Aluminum, you can compare the effects of market volatilities on GEELY AUTOMOBILE and Reliance 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 GEELY AUTOMOBILE with a short position of Reliance Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEELY AUTOMOBILE and Reliance Steel.
Diversification Opportunities for GEELY AUTOMOBILE and Reliance Steel
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GEELY and Reliance is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding GEELY AUTOMOBILE and Reliance Steel Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Steel Aluminum and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE are associated (or correlated) with Reliance Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Steel Aluminum has no effect on the direction of GEELY AUTOMOBILE i.e., GEELY AUTOMOBILE and Reliance Steel go up and down completely randomly.
Pair Corralation between GEELY AUTOMOBILE and Reliance Steel
Assuming the 90 days trading horizon GEELY AUTOMOBILE is expected to generate 1.6 times more return on investment than Reliance Steel. However, GEELY AUTOMOBILE is 1.6 times more volatile than Reliance Steel Aluminum. It trades about 0.14 of its potential returns per unit of risk. Reliance Steel Aluminum is currently generating about 0.03 per unit of risk. If you would invest 73.00 in GEELY AUTOMOBILE on September 20, 2024 and sell it today you would earn a total of 118.00 from holding GEELY AUTOMOBILE or generate 161.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GEELY AUTOMOBILE vs. Reliance Steel Aluminum
Performance |
| Timeline |
| GEELY AUTOMOBILE |
| Reliance Steel Aluminum |
GEELY AUTOMOBILE and Reliance Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GEELY AUTOMOBILE and Reliance Steel
The main advantage of trading using opposite GEELY AUTOMOBILE and Reliance Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEELY AUTOMOBILE position performs unexpectedly, Reliance 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 Reliance Steel will offset losses from the drop in Reliance Steel's long position.| GEELY AUTOMOBILE vs. Apollo Investment Corp | GEELY AUTOMOBILE vs. WIZZ AIR HLDGUNSPADR4 | GEELY AUTOMOBILE vs. New Residential Investment | GEELY AUTOMOBILE vs. MGIC INVESTMENT |
| Reliance Steel vs. GEELY AUTOMOBILE | Reliance Steel vs. LGI Homes | Reliance Steel vs. Commercial Vehicle Group | Reliance Steel vs. Tri Pointe Homes |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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