Correlation Between RELIANCE STEEL and Gateway Real

Can any of the company-specific risk be diversified away by investing in both RELIANCE STEEL and Gateway Real 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 Gateway Real 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 Gateway Real Estate, you can compare the effects of market volatilities on RELIANCE STEEL and Gateway Real 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 Gateway Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of RELIANCE STEEL and Gateway Real.

Diversification Opportunities for RELIANCE STEEL and Gateway Real

-0.41

Correlation Coefficient

RELIANCE STEEL  Gateway Real

Very good diversification

The 3 months correlation between RELIANCE and Gateway is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding RELIANCE STEEL AL and Gateway Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gateway Real Estate 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 Gateway Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gateway Real Estate has no effect on the direction of RELIANCE STEEL i.e., RELIANCE STEEL and Gateway Real go up and down completely randomly.

Pair Corralation between RELIANCE STEEL and Gateway Real

Assuming the 90 days trading horizon RELIANCE STEEL is expected to generate 5.66 times less return on investment than Gateway Real. But when comparing it to its historical volatility, RELIANCE STEEL AL is 10.7 times less risky than Gateway Real. It trades about 0.05 of its potential returns per unit of risk. Gateway Real Estate is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  410.00  in Gateway Real Estate on September 29, 2024 and sell it today you would lose (373.00) from holding Gateway Real Estate or give up 90.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

RELIANCE STEEL AL  vs.  Gateway Real Estate

RELIANCE STEEL AL

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RELIANCE STEEL AL are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, RELIANCE STEEL is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Gateway Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gateway Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with RELIANCE STEEL and Gateway Real

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

The idea behind RELIANCE STEEL AL and Gateway Real Estate 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.