Correlation Between Reliance Steel and Hugo Boss

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

Diversification Opportunities for Reliance Steel and Hugo Boss

-0.61

Correlation Coefficient

Reliance Steel  Hugo Boss

Excellent diversification

The 3 months correlation between Reliance and Hugo is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Steel Aluminum and Hugo Boss AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hugo Boss AG 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 Hugo Boss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hugo Boss AG has no effect on the direction of Reliance Steel i.e., Reliance Steel and Hugo Boss go up and down completely randomly.

Pair Corralation between Reliance Steel and Hugo Boss

Assuming the 90 days horizon Reliance Steel Aluminum is expected to generate 0.81 times more return on investment than Hugo Boss. However, Reliance Steel Aluminum is 1.24 times less risky than Hugo Boss. It trades about 0.03 of its potential returns per unit of risk. Hugo Boss AG is currently generating about -0.01 per unit of risk. If you would invest  22,750  in Reliance Steel Aluminum on December 4, 2024 and sell it today you would earn a total of  5,580  from holding Reliance Steel Aluminum or generate 24.53% return on investment over 90 days.

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

Reliance Steel Aluminum  vs.  Hugo Boss AG

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. 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.

Hugo Boss AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hugo Boss AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Hugo Boss exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Reliance Steel and Hugo Boss

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

The idea behind Reliance Steel Aluminum and Hugo Boss AG 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.