Correlation Between RELIANCE STEEL and Grupo Carso

Can any of the company-specific risk be diversified away by investing in both RELIANCE STEEL and Grupo Carso 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 Grupo Carso into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RELIANCE STEEL AL and Grupo Carso SAB, you can compare the effects of market volatilities on RELIANCE STEEL and Grupo Carso 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 Grupo Carso. Check out your portfolio center. Please also check ongoing floating volatility patterns of RELIANCE STEEL and Grupo Carso.

Diversification Opportunities for RELIANCE STEEL and Grupo Carso

0.81

Correlation Coefficient

RELIANCE STEEL  Grupo Carso

Very poor diversification

The 3 months correlation between RELIANCE and Grupo is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding RELIANCE STEEL AL and Grupo Carso SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Carso SAB 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 AL are associated (or correlated) with Grupo Carso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Carso SAB has no effect on the direction of RELIANCE STEEL i.e., RELIANCE STEEL and Grupo Carso go up and down completely randomly.

Pair Corralation between RELIANCE STEEL and Grupo Carso

Assuming the 90 days trading horizon RELIANCE STEEL is expected to generate 17.44 times less return on investment than Grupo Carso. But when comparing it to its historical volatility, RELIANCE STEEL AL is 1.55 times less risky than Grupo Carso. It trades about 0.0 of its potential returns per unit of risk. Grupo Carso SAB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  515.00  in Grupo Carso SAB on December 21, 2024 and sell it today you would earn a total of  15.00  from holding Grupo Carso SAB or generate 2.91% return on investment over 90 days.

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

RELIANCE STEEL AL  vs.  Grupo Carso SAB

RELIANCE STEEL AL

Risk-Adjusted Performance

Very Weak

Over the last 90 days RELIANCE STEEL AL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, RELIANCE STEEL is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Grupo Carso SAB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Carso SAB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Grupo Carso is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with RELIANCE STEEL and Grupo Carso

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

The idea behind RELIANCE STEEL AL and Grupo Carso SAB 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.