Correlation Between Reliance Steel and Usinas Siderurgicas

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

Diversification Opportunities for Reliance Steel and Usinas Siderurgicas

0.58

Correlation Coefficient

Reliance Steel  Usinas Siderurgicas

Very weak diversification

The 3 months correlation between Reliance and Usinas is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Steel Aluminum and Usinas Siderurgicas de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Usinas Siderurgicas 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 Usinas Siderurgicas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Usinas Siderurgicas has no effect on the direction of Reliance Steel i.e., Reliance Steel and Usinas Siderurgicas go up and down completely randomly.

Pair Corralation between Reliance Steel and Usinas Siderurgicas

Allowing for the 90-day total investment horizon Reliance Steel is expected to generate 1.09 times less return on investment than Usinas Siderurgicas. But when comparing it to its historical volatility, Reliance Steel Aluminum is 3.0 times less risky than Usinas Siderurgicas. It trades about 0.13 of its potential returns per unit of risk. Usinas Siderurgicas de is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  90.00  in Usinas Siderurgicas de on December 29, 2024 and sell it today you would earn a total of  6.00  from holding Usinas Siderurgicas de or generate 6.67% return on investment over 90 days.

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

Reliance Steel Aluminum  vs.  Usinas Siderurgicas de

Reliance Steel Aluminum

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Reliance Steel Aluminum are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Reliance Steel may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Usinas Siderurgicas

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Usinas Siderurgicas de are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Usinas Siderurgicas may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Reliance Steel and Usinas Siderurgicas

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

The idea behind Reliance Steel Aluminum and Usinas Siderurgicas de 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.