Correlation Between United States and ReTo Eco

Can any of the company-specific risk be diversified away by investing in both United States and ReTo Eco 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 United States and ReTo Eco into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between United States Steel and ReTo Eco Solutions, you can compare the effects of market volatilities on United States and ReTo Eco 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 United States with a short position of ReTo Eco. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and ReTo Eco.

Diversification Opportunities for United States and ReTo Eco

-0.69

Correlation Coefficient

United States  ReTo Eco

Excellent diversification

The 3 months correlation between United and ReTo is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and ReTo Eco Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ReTo Eco Solutions and United States 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 United States Steel are associated (or correlated) with ReTo Eco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ReTo Eco Solutions has no effect on the direction of United States i.e., United States and ReTo Eco go up and down completely randomly.

Pair Corralation between United States and ReTo Eco

Taking into account the 90-day investment horizon United States Steel is expected to generate 0.16 times more return on investment than ReTo Eco. However, United States Steel is 6.12 times less risky than ReTo Eco. It trades about 0.22 of its potential returns per unit of risk. ReTo Eco Solutions is currently generating about -0.03 per unit of risk. If you would invest  3,043  in United States Steel on January 3, 2025 and sell it today you would earn a total of  1,197  from holding United States Steel or generate 39.34% return on investment over 90 days.

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

United States Steel  vs.  ReTo Eco Solutions

United States Steel

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in United States Steel are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, United States showed solid returns over the last few months and may actually be approaching a breakup point.

ReTo Eco Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days ReTo Eco Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with United States and ReTo Eco

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

The idea behind United States Steel and ReTo Eco Solutions 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.