Correlation Between Reliance Steel and ZK International
Can any of the company-specific risk be diversified away by investing in both Reliance Steel and ZK International 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 Reliance Steel and ZK International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reliance Steel Aluminum and ZK International Group, you can compare the effects of market volatilities on Reliance Steel and ZK International 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 Reliance Steel with a short position of ZK International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Steel and ZK International.
Diversification Opportunities for Reliance Steel and ZK International
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Reliance and ZKIN is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Steel Aluminum and ZK International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZK International and Reliance 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 Reliance Steel Aluminum are associated (or correlated) with ZK International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZK International has no effect on the direction of Reliance Steel i.e., Reliance Steel and ZK International go up and down completely randomly.
Pair Corralation between Reliance Steel and ZK International
Allowing for the 90-day total investment horizon Reliance Steel Aluminum is expected to generate 0.36 times more return on investment than ZK International. However, Reliance Steel Aluminum is 2.82 times less risky than ZK International. It trades about 0.21 of its potential returns per unit of risk. ZK International Group is currently generating about 0.01 per unit of risk. If you would invest 28,609 in Reliance Steel Aluminum on September 2, 2024 and sell it today you would earn a total of 3,515 from holding Reliance Steel Aluminum or generate 12.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reliance Steel Aluminum vs. ZK International Group
Performance |
| Timeline |
| Reliance Steel Aluminum |
| ZK International |
Reliance Steel and ZK International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reliance Steel and ZK International
The main advantage of trading using opposite Reliance Steel and ZK International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reliance Steel position performs unexpectedly, ZK International 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 ZK International will offset losses from the drop in ZK International's long position.| Reliance Steel vs. Universal Stainless Alloy | Reliance Steel vs. Outokumpu Oyj ADR | Reliance Steel vs. Olympic Steel | Reliance Steel vs. POSCO Holdings |
| ZK International vs. Hongli Group Ordinary | ZK International vs. Reliance Steel Aluminum | ZK International vs. Companhia Siderurgica Nacional | ZK International vs. ArcelorMittal SA ADR |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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