Correlation Between Reliance Steel and Celanese

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

Diversification Opportunities for Reliance Steel and Celanese

0.17

Correlation Coefficient

Reliance Steel  Celanese

Average diversification

The 3 months correlation between Reliance and Celanese is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Steel Aluminum and Celanese in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celanese 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 Celanese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celanese has no effect on the direction of Reliance Steel i.e., Reliance Steel and Celanese go up and down completely randomly.

Pair Corralation between Reliance Steel and Celanese

Allowing for the 90-day total investment horizon Reliance Steel Aluminum is expected to generate 0.43 times more return on investment than Celanese. However, Reliance Steel Aluminum is 2.35 times less risky than Celanese. It trades about -0.09 of its potential returns per unit of risk. Celanese is currently generating about -0.16 per unit of risk. If you would invest  32,124  in Reliance Steel Aluminum on November 29, 2024 and sell it today you would lose (2,624) from holding Reliance Steel Aluminum or give up 8.17% of portfolio value over 90 days.

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

Reliance Steel Aluminum  vs.  Celanese

Reliance Steel Aluminum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Reliance Steel Aluminum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Celanese

Risk-Adjusted Performance

Very Weak

Over the last 90 days Celanese has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Reliance Steel and Celanese

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

The idea behind Reliance Steel Aluminum and Celanese 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.