Correlation Between RELIANCE STEEL and Perma-Fix Environmental

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

Diversification Opportunities for RELIANCE STEEL and Perma-Fix Environmental

0.35

Correlation Coefficient

RELIANCE STEEL  Perma-Fix Environmental

Weak diversification

The 3 months correlation between RELIANCE and Perma-Fix is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding RELIANCE STEEL AL and Perma Fix Environmental Servic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perma Fix Environmental 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 Perma-Fix Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perma Fix Environmental has no effect on the direction of RELIANCE STEEL i.e., RELIANCE STEEL and Perma-Fix Environmental go up and down completely randomly.

Pair Corralation between RELIANCE STEEL and Perma-Fix Environmental

Assuming the 90 days trading horizon RELIANCE STEEL AL is expected to generate 0.5 times more return on investment than Perma-Fix Environmental. However, RELIANCE STEEL AL is 2.0 times less risky than Perma-Fix Environmental. It trades about -0.1 of its potential returns per unit of risk. Perma Fix Environmental Services is currently generating about -0.26 per unit of risk. If you would invest  28,890  in RELIANCE STEEL AL on December 5, 2024 and sell it today you would lose (2,500) from holding RELIANCE STEEL AL or give up 8.65% of portfolio value over 90 days.

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

RELIANCE STEEL AL  vs.  Perma Fix Environmental Servic

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Perma Fix Environmental

Risk-Adjusted Performance

Very Weak

Over the last 90 days Perma Fix Environmental Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with RELIANCE STEEL and Perma-Fix Environmental

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

The idea behind RELIANCE STEEL AL and Perma Fix Environmental Services 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.