Correlation Between Reliance Steel and Southern Copper

By analyzing existing cross correlation between Reliance Steel Aluminum and Southern Copper you can compare the effects of market volatilities on Reliance Steel and Southern Copper 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 Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Steel and Southern Copper.

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Can any of the company-specific risk be diversified away by investing in both Reliance Steel and Southern Copper at the same time? Although using correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combing Reliance Steel and Southern Copper into the same portfolio which is an essential part of fundamental portfolio management process.

Diversification Opportunities for Reliance Steel and Southern Copper

0.81
Correlation
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Very poor diversification

The 3 months correlation between Reliance and Southern is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Steel Aluminum Co and Southern Copper Corp. in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper 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 Southern Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Copper has no effect on the direction of Reliance Steel i.e. Reliance Steel and Southern Copper go up and down completely randomly.

Pair Corralation between Reliance Steel and Southern Copper

Allowing for the 30-days total investment horizon, Reliance Steel is expected to generate 4.46 times less return on investment than Southern Copper. But when comparing it to its historical volatility, Reliance Steel Aluminum is 1.05 times less risky than Southern Copper. It trades about 0.01 of its potential returns per unit of risk. Southern Copper is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,536  in Southern Copper on May 4, 2020 and sell it today you would earn a total of  308.00  from holding Southern Copper or generate 8.71% return on investment over 30 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Reliance Steel Aluminum Co  vs.  Southern Copper Corp.

 Performance (%) 
      Timeline 
Reliance Steel Aluminum 
00

Reliance Steel Risk-Adjusted Performance

Over the last 30 days Reliance Steel Aluminum has generated negative risk-adjusted returns adding no value to investors with long positions. In defiance of relatively invariable forward-looking signals, Reliance Steel is not utilizing all of its potentials. The existing stock price agitation, may contribute to short term losses for the management.
Southern Copper 
33

Southern Copper Risk-Adjusted Performance

Compared to the overall equity markets, risk-adjusted returns on investments in Southern Copper are ranked lower than 3 (%) of all global equities and portfolios over the last 30 days. Allthough quite weak forward indicators, Southern Copper disclosed solid returns over the last few months and may actually be approaching a breakup point.

Reliance Steel and Southern Copper Volatility Contrast

 Predicted Return Density 
      Returns 
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