Correlation Between Aena SME and Reliance Steel
Can any of the company-specific risk be diversified away by investing in both Aena SME and Reliance Steel 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 Aena SME and Reliance Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aena SME SA and Reliance Steel Aluminum, you can compare the effects of market volatilities on Aena SME and Reliance Steel 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 Aena SME with a short position of Reliance Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aena SME and Reliance Steel.
Diversification Opportunities for Aena SME and Reliance Steel
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aena and Reliance is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Aena SME SA and Reliance Steel Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Steel Aluminum and Aena SME 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 Aena SME SA are associated (or correlated) with Reliance Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Steel Aluminum has no effect on the direction of Aena SME i.e., Aena SME and Reliance Steel go up and down completely randomly.
Pair Corralation between Aena SME and Reliance Steel
Assuming the 90 days horizon Aena SME SA is expected to generate 0.74 times more return on investment than Reliance Steel. However, Aena SME SA is 1.35 times less risky than Reliance Steel. It trades about 0.05 of its potential returns per unit of risk. Reliance Steel Aluminum is currently generating about -0.08 per unit of risk. If you would invest 20,820 in Aena SME SA on December 2, 2024 and sell it today you would earn a total of 560.00 from holding Aena SME SA or generate 2.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Aena SME SA vs. Reliance Steel Aluminum
Performance |
Timeline |
Aena SME SA |
Reliance Steel Aluminum |
Aena SME and Reliance Steel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aena SME and Reliance Steel
The main advantage of trading using opposite Aena SME and Reliance Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aena SME position performs unexpectedly, Reliance Steel 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 Reliance Steel will offset losses from the drop in Reliance Steel's long position.Aena SME vs. New Residential Investment | Aena SME vs. HK Electric Investments | Aena SME vs. Scottish Mortgage Investment | Aena SME vs. MidCap Financial Investment |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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