Correlation Between Reliance Steel and Amundi Label

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

Diversification Opportunities for Reliance Steel and Amundi Label

-0.55

Correlation Coefficient

Reliance Steel  Amundi Label

Excellent diversification

The 3 months correlation between Reliance and Amundi is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Steel Aluminum and Amundi Label Actions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi Label Actions 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 Amundi Label. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi Label Actions has no effect on the direction of Reliance Steel i.e., Reliance Steel and Amundi Label go up and down completely randomly.

Pair Corralation between Reliance Steel and Amundi Label

Assuming the 90 days horizon Reliance Steel Aluminum is expected to generate 2.29 times more return on investment than Amundi Label. However, Reliance Steel is 2.29 times more volatile than Amundi Label Actions. It trades about 0.0 of its potential returns per unit of risk. Amundi Label Actions is currently generating about -0.01 per unit of risk. If you would invest  26,267  in Reliance Steel Aluminum on September 29, 2024 and sell it today you would lose (327.00) from holding Reliance Steel Aluminum or give up 1.24% of portfolio value over 90 days.

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

Reliance Steel Aluminum  vs.  Amundi Label Actions

Reliance Steel Aluminum

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Reliance Steel Aluminum are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Reliance Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Amundi Label Actions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amundi Label Actions has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Amundi Label is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Reliance Steel and Amundi Label

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

The idea behind Reliance Steel Aluminum and Amundi Label Actions 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.