Correlation Between Reliance Steel and ANTA Sports

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

Diversification Opportunities for Reliance Steel and ANTA Sports

-0.13

Correlation Coefficient

Reliance Steel  ANTA Sports

Good diversification

The 3 months correlation between Reliance and ANTA is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Steel Aluminum and ANTA Sports Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANTA Sports Products 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 ANTA Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANTA Sports Products has no effect on the direction of Reliance Steel i.e., Reliance Steel and ANTA Sports go up and down completely randomly.

Pair Corralation between Reliance Steel and ANTA Sports

Assuming the 90 days horizon Reliance Steel is expected to generate 2.73 times less return on investment than ANTA Sports. But when comparing it to its historical volatility, Reliance Steel Aluminum is 1.48 times less risky than ANTA Sports. It trades about 0.04 of its potential returns per unit of risk. ANTA Sports Products is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  957.00  in ANTA Sports Products on December 30, 2024 and sell it today you would earn a total of  88.00  from holding ANTA Sports Products or generate 9.2% return on investment over 90 days.

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

Reliance Steel Aluminum  vs.  ANTA Sports Products

Reliance Steel Aluminum

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Reliance Steel Aluminum are ranked lower than 3 (%) 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.

ANTA Sports Products

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ANTA Sports Products are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, ANTA Sports may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Reliance Steel and ANTA Sports

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

The idea behind Reliance Steel Aluminum and ANTA Sports Products 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.