Correlation Between Reliance Steel and 2G ENERGY
Can any of the company-specific risk be diversified away by investing in both Reliance Steel and 2G ENERGY 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 2G ENERGY 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 2G ENERGY , you can compare the effects of market volatilities on Reliance Steel and 2G ENERGY 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 2G ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Steel and 2G ENERGY.
Diversification Opportunities for Reliance Steel and 2G ENERGY
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Reliance and 2GB is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Steel Aluminum and 2G ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 2G ENERGY 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 2G ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 2G ENERGY has no effect on the direction of Reliance Steel i.e., Reliance Steel and 2G ENERGY go up and down completely randomly.
Pair Corralation between Reliance Steel and 2G ENERGY
Assuming the 90 days horizon Reliance Steel Aluminum is expected to generate 1.0 times more return on investment than 2G ENERGY. However, Reliance Steel is 1.0 times more volatile than 2G ENERGY . It trades about 0.25 of its potential returns per unit of risk. 2G ENERGY is currently generating about -0.06 per unit of risk. If you would invest 26,133 in Reliance Steel Aluminum on August 29, 2024 and sell it today you would earn a total of 4,247 from holding Reliance Steel Aluminum or generate 16.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Reliance Steel Aluminum vs. 2G ENERGY
Performance |
| Timeline |
| Reliance Steel Aluminum |
| 2G ENERGY |
Reliance Steel and 2G ENERGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reliance Steel and 2G ENERGY
The main advantage of trading using opposite Reliance Steel and 2G ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reliance Steel position performs unexpectedly, 2G ENERGY 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 2G ENERGY will offset losses from the drop in 2G ENERGY's long position.| Reliance Steel vs. OURGAME INTHOLDL 00005 | Reliance Steel vs. FUTURE GAMING GRP | Reliance Steel vs. IDP EDUCATION LTD | Reliance Steel vs. G8 EDUCATION |
| 2G ENERGY vs. FISH PAYK HEALTH | 2G ENERGY vs. GREENX METALS LTD | 2G ENERGY vs. Lion One Metals | 2G ENERGY vs. Zijin Mining Group |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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