Correlation Between METAIR INVTS and Reliance Steel

Can any of the company-specific risk be diversified away by investing in both METAIR INVTS 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 METAIR INVTS and Reliance Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between METAIR INVTS LTD and Reliance Steel Aluminum, you can compare the effects of market volatilities on METAIR INVTS 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 METAIR INVTS with a short position of Reliance Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of METAIR INVTS and Reliance Steel.

Diversification Opportunities for METAIR INVTS and Reliance Steel

-0.78

Correlation Coefficient

METAIR INVTS  Reliance Steel

Pay attention - limited upside

The 3 months correlation between METAIR and Reliance is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding METAIR INVTS LTD 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 METAIR INVTS 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 METAIR INVTS LTD 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 METAIR INVTS i.e., METAIR INVTS and Reliance Steel go up and down completely randomly.

Pair Corralation between METAIR INVTS and Reliance Steel

Assuming the 90 days trading horizon METAIR INVTS LTD is expected to generate 2.51 times more return on investment than Reliance Steel. However, METAIR INVTS is 2.51 times more volatile than Reliance Steel Aluminum. It trades about 0.09 of its potential returns per unit of risk. Reliance Steel Aluminum is currently generating about -0.19 per unit of risk. If you would invest  54.00  in METAIR INVTS LTD on September 19, 2024 and sell it today you would earn a total of  3.00  from holding METAIR INVTS LTD or generate 5.56% return on investment over 90 days.

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

METAIR INVTS LTD  vs.  Reliance Steel Aluminum

METAIR INVTS LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days METAIR INVTS LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Reliance Steel Aluminum

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Reliance Steel Aluminum are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Reliance Steel may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with METAIR INVTS and Reliance Steel

The main advantage of trading using opposite METAIR INVTS and Reliance Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if METAIR INVTS 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.

The idea behind METAIR INVTS LTD and Reliance Steel Aluminum 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.

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.