Correlation Between RELIANCE STEEL and Omeros

Can any of the company-specific risk be diversified away by investing in both RELIANCE STEEL and Omeros 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 Omeros 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 Omeros, you can compare the effects of market volatilities on RELIANCE STEEL and Omeros 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 Omeros. Check out your portfolio center. Please also check ongoing floating volatility patterns of RELIANCE STEEL and Omeros.

Diversification Opportunities for RELIANCE STEEL and Omeros

0.77

Correlation Coefficient

RELIANCE STEEL  Omeros

Poor diversification

The 3 months correlation between RELIANCE and Omeros is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding RELIANCE STEEL AL and Omeros in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omeros 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 Omeros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omeros has no effect on the direction of RELIANCE STEEL i.e., RELIANCE STEEL and Omeros go up and down completely randomly.

Pair Corralation between RELIANCE STEEL and Omeros

Assuming the 90 days trading horizon RELIANCE STEEL is expected to generate 8.68 times less return on investment than Omeros. But when comparing it to its historical volatility, RELIANCE STEEL AL is 6.5 times less risky than Omeros. It trades about 0.11 of its potential returns per unit of risk. Omeros is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  347.00  in Omeros on September 16, 2024 and sell it today you would earn a total of  372.00  from holding Omeros or generate 107.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

RELIANCE STEEL AL  vs.  Omeros

RELIANCE STEEL AL

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RELIANCE STEEL AL are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, RELIANCE STEEL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Omeros

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Omeros are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Omeros reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RELIANCE STEEL and Omeros

The main advantage of trading using opposite RELIANCE STEEL and Omeros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RELIANCE STEEL position performs unexpectedly, Omeros 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 Omeros will offset losses from the drop in Omeros' long position.

The idea behind RELIANCE STEEL AL and Omeros 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.