Correlation Between Reliance Steel and BANK MANDIRI
Can any of the company-specific risk be diversified away by investing in both Reliance Steel and BANK MANDIRI 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 BANK MANDIRI 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 BANK MANDIRI, you can compare the effects of market volatilities on Reliance Steel and BANK MANDIRI 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 BANK MANDIRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Steel and BANK MANDIRI.
Diversification Opportunities for Reliance Steel and BANK MANDIRI
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Reliance and BANK is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Steel Aluminum and BANK MANDIRI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK MANDIRI 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 BANK MANDIRI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK MANDIRI has no effect on the direction of Reliance Steel i.e., Reliance Steel and BANK MANDIRI go up and down completely randomly.
Pair Corralation between Reliance Steel and BANK MANDIRI
Assuming the 90 days horizon Reliance Steel Aluminum is expected to generate 1.04 times more return on investment than BANK MANDIRI. However, Reliance Steel is 1.04 times more volatile than BANK MANDIRI. It trades about 0.22 of its potential returns per unit of risk. BANK MANDIRI is currently generating about -0.04 per unit of risk. If you would invest 27,029 in Reliance Steel Aluminum on August 31, 2024 and sell it today you would earn a total of 3,571 from holding Reliance Steel Aluminum or generate 13.21% 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. BANK MANDIRI
Performance |
| Timeline |
| Reliance Steel Aluminum |
| BANK MANDIRI |
Reliance Steel and BANK MANDIRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reliance Steel and BANK MANDIRI
The main advantage of trading using opposite Reliance Steel and BANK MANDIRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reliance Steel position performs unexpectedly, BANK MANDIRI 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 BANK MANDIRI will offset losses from the drop in BANK MANDIRI's long position.The idea behind Reliance Steel Aluminum and BANK MANDIRI pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| BANK MANDIRI vs. SIVERS SEMICONDUCTORS AB | BANK MANDIRI vs. Darden Restaurants | BANK MANDIRI vs. Reliance Steel Aluminum | BANK MANDIRI vs. Q2M Managementberatung AG |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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