Correlation Between Rocket Internet and Reliance Steel
Can any of the company-specific risk be diversified away by investing in both Rocket Internet 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 Rocket Internet and Reliance Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rocket Internet SE and Reliance Steel Aluminum, you can compare the effects of market volatilities on Rocket Internet 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 Rocket Internet with a short position of Reliance Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocket Internet and Reliance Steel.
Diversification Opportunities for Rocket Internet and Reliance Steel
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Rocket and Reliance is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Internet SE 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 Rocket Internet 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 Rocket Internet SE 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 Rocket Internet i.e., Rocket Internet and Reliance Steel go up and down completely randomly.
Pair Corralation between Rocket Internet and Reliance Steel
Assuming the 90 days trading horizon Rocket Internet SE is expected to under-perform the Reliance Steel. But the stock apears to be less risky and, when comparing its historical volatility, Rocket Internet SE is 1.22 times less risky than Reliance Steel. The stock trades about -0.03 of its potential returns per unit of risk. The Reliance Steel Aluminum is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 24,902 in Reliance Steel Aluminum on September 12, 2024 and sell it today you would earn a total of 3,898 from holding Reliance Steel Aluminum or generate 15.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rocket Internet SE vs. Reliance Steel Aluminum
Performance |
| Timeline |
| Rocket Internet SE |
| Reliance Steel Aluminum |
Rocket Internet and Reliance Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rocket Internet and Reliance Steel
The main advantage of trading using opposite Rocket Internet and Reliance Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocket Internet 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.| Rocket Internet vs. Salesforce | Rocket Internet vs. Superior Plus Corp | Rocket Internet vs. SIVERS SEMICONDUCTORS AB | Rocket Internet vs. Norsk Hydro ASA |
| Reliance Steel vs. Tower One Wireless | Reliance Steel vs. T MOBILE US | Reliance Steel vs. Entravision Communications | Reliance Steel vs. Luckin Coffee |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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