Correlation Between Boston Scientific and Reliance Industries

Can any of the company-specific risk be diversified away by investing in both Boston Scientific and Reliance Industries 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 Boston Scientific and Reliance Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Boston Scientific Corp and Reliance Industries Ltd, you can compare the effects of market volatilities on Boston Scientific and Reliance Industries 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 Boston Scientific with a short position of Reliance Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Scientific and Reliance Industries.

Diversification Opportunities for Boston Scientific and Reliance Industries

-0.8

Correlation Coefficient

Boston Scientific  Reliance Industries

Pay attention - limited upside

The 3 months correlation between Boston and Reliance is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Boston Scientific Corp and Reliance Industries Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Industries and Boston Scientific 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 Boston Scientific Corp are associated (or correlated) with Reliance Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Industries has no effect on the direction of Boston Scientific i.e., Boston Scientific and Reliance Industries go up and down completely randomly.

Pair Corralation between Boston Scientific and Reliance Industries

Assuming the 90 days trading horizon Boston Scientific Corp is expected to generate 0.84 times more return on investment than Reliance Industries. However, Boston Scientific Corp is 1.19 times less risky than Reliance Industries. It trades about 0.09 of its potential returns per unit of risk. Reliance Industries Ltd is currently generating about -0.26 per unit of risk. If you would invest  8,393  in Boston Scientific Corp on September 23, 2024 and sell it today you would earn a total of  524.00  from holding Boston Scientific Corp or generate 6.24% return on investment over 90 days.

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

Boston Scientific Corp  vs.  Reliance Industries Ltd

Boston Scientific Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Scientific Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Boston Scientific is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Reliance Industries

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Boston Scientific and Reliance Industries

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

The idea behind Boston Scientific Corp and Reliance Industries Ltd 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.