Correlation Between Reliance Steel and GUDANG GARAM
Can any of the company-specific risk be diversified away by investing in both Reliance Steel and GUDANG GARAM 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 GUDANG GARAM 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 GUDANG GARAM, you can compare the effects of market volatilities on Reliance Steel and GUDANG GARAM 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 GUDANG GARAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Steel and GUDANG GARAM.
Diversification Opportunities for Reliance Steel and GUDANG GARAM
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Reliance and GUDANG is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Steel Aluminum and GUDANG GARAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUDANG GARAM 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 GUDANG GARAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUDANG GARAM has no effect on the direction of Reliance Steel i.e., Reliance Steel and GUDANG GARAM go up and down completely randomly.
Pair Corralation between Reliance Steel and GUDANG GARAM
Assuming the 90 days horizon Reliance Steel Aluminum is expected to generate 0.75 times more return on investment than GUDANG GARAM. However, Reliance Steel Aluminum is 1.33 times less risky than GUDANG GARAM. It trades about 0.06 of its potential returns per unit of risk. GUDANG GARAM is currently generating about -0.02 per unit of risk. If you would invest 18,785 in Reliance Steel Aluminum on September 3, 2024 and sell it today you would earn a total of 11,665 from holding Reliance Steel Aluminum or generate 62.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reliance Steel Aluminum vs. GUDANG GARAM
Performance |
| Timeline |
| Reliance Steel Aluminum |
| GUDANG GARAM |
Reliance Steel and GUDANG GARAM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reliance Steel and GUDANG GARAM
The main advantage of trading using opposite Reliance Steel and GUDANG GARAM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reliance Steel position performs unexpectedly, GUDANG GARAM 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 GUDANG GARAM will offset losses from the drop in GUDANG GARAM's long position.| Reliance Steel vs. ArcelorMittal | Reliance Steel vs. Steel Dynamics | Reliance Steel vs. NIPPON STEEL SPADR | Reliance Steel vs. POSCO Holdings |
| GUDANG GARAM vs. Thai Beverage Public | GUDANG GARAM vs. Cal Maine Foods | GUDANG GARAM vs. Harmony Gold Mining | GUDANG GARAM vs. GALENA MINING LTD |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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