Correlation Between RELIANCE STEEL and SHINHAN FINL
Can any of the company-specific risk be diversified away by investing in both RELIANCE STEEL and SHINHAN FINL 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 SHINHAN FINL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RELIANCE STEEL AL and SHINHAN FINL ADR1, you can compare the effects of market volatilities on RELIANCE STEEL and SHINHAN FINL 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 SHINHAN FINL. Check out your portfolio center. Please also check ongoing floating volatility patterns of RELIANCE STEEL and SHINHAN FINL.
Diversification Opportunities for RELIANCE STEEL and SHINHAN FINL
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between RELIANCE and SHINHAN is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding RELIANCE STEEL AL and SHINHAN FINL ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHINHAN FINL ADR1 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 AL are associated (or correlated) with SHINHAN FINL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHINHAN FINL ADR1 has no effect on the direction of RELIANCE STEEL i.e., RELIANCE STEEL and SHINHAN FINL go up and down completely randomly.
Pair Corralation between RELIANCE STEEL and SHINHAN FINL
Assuming the 90 days trading horizon RELIANCE STEEL AL is expected to generate 0.88 times more return on investment than SHINHAN FINL. However, RELIANCE STEEL AL is 1.13 times less risky than SHINHAN FINL. It trades about 0.34 of its potential returns per unit of risk. SHINHAN FINL ADR1 is currently generating about 0.0 per unit of risk. If you would invest 26,573 in RELIANCE STEEL AL on August 28, 2024 and sell it today you would earn a total of 4,017 from holding RELIANCE STEEL AL or generate 15.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RELIANCE STEEL AL vs. SHINHAN FINL ADR1
Performance |
| Timeline |
| RELIANCE STEEL AL |
| SHINHAN FINL ADR1 |
RELIANCE STEEL and SHINHAN FINL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RELIANCE STEEL and SHINHAN FINL
The main advantage of trading using opposite RELIANCE STEEL and SHINHAN FINL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RELIANCE STEEL position performs unexpectedly, SHINHAN FINL 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 SHINHAN FINL will offset losses from the drop in SHINHAN FINL's long position.| RELIANCE STEEL vs. Chunghwa Telecom Co | RELIANCE STEEL vs. Zijin Mining Group | RELIANCE STEEL vs. Rogers Communications | RELIANCE STEEL vs. Zoom Video Communications |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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