Correlation Between Reliance Steel and Sun Hung
Can any of the company-specific risk be diversified away by investing in both Reliance Steel and Sun Hung 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 Sun Hung 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 Sun Hung Kai, you can compare the effects of market volatilities on Reliance Steel and Sun Hung 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 Sun Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Steel and Sun Hung.
Diversification Opportunities for Reliance Steel and Sun Hung
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Reliance and Sun is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Steel Aluminum and Sun Hung Kai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Hung Kai 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 Sun Hung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Hung Kai has no effect on the direction of Reliance Steel i.e., Reliance Steel and Sun Hung go up and down completely randomly.
Pair Corralation between Reliance Steel and Sun Hung
Assuming the 90 days horizon Reliance Steel is expected to generate 2.34 times less return on investment than Sun Hung. But when comparing it to its historical volatility, Reliance Steel Aluminum is 2.06 times less risky than Sun Hung. It trades about 0.14 of its potential returns per unit of risk. Sun Hung Kai is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 642.00 in Sun Hung Kai on September 13, 2024 and sell it today you would earn a total of 293.00 from holding Sun Hung Kai or generate 45.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Reliance Steel Aluminum vs. Sun Hung Kai
Performance |
Timeline |
Reliance Steel Aluminum |
Sun Hung Kai |
Reliance Steel and Sun Hung Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Reliance Steel and Sun Hung
The main advantage of trading using opposite Reliance Steel and Sun Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reliance Steel position performs unexpectedly, Sun Hung 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 Sun Hung will offset losses from the drop in Sun Hung's long position.Reliance Steel vs. Transportadora de Gas | Reliance Steel vs. Monster Beverage Corp | Reliance Steel vs. THAI BEVERAGE | Reliance Steel vs. PARKEN Sport Entertainment |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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