Correlation Between Oakley Capital and Reliance Industries

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

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

Diversification Opportunities for Oakley Capital and Reliance Industries

-0.1

Correlation Coefficient

Oakley Capital  Reliance Industries

Good diversification

The 3 months correlation between Oakley and Reliance is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Oakley Capital Investments and Reliance Industries Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Industries and Oakley Capital 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 Oakley Capital Investments 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 Oakley Capital i.e., Oakley Capital and Reliance Industries go up and down completely randomly.

Pair Corralation between Oakley Capital and Reliance Industries

Assuming the 90 days trading horizon Oakley Capital Investments is expected to generate 1.56 times more return on investment than Reliance Industries. However, Oakley Capital is 1.56 times more volatile than Reliance Industries Ltd. It trades about 0.22 of its potential returns per unit of risk. Reliance Industries Ltd is currently generating about -0.31 per unit of risk. If you would invest  47,000  in Oakley Capital Investments on October 6, 2024 and sell it today you would earn a total of  3,200  from holding Oakley Capital Investments or generate 6.81% return on investment over 90 days.

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

Oakley Capital Investments  vs.  Reliance Industries Ltd

Oakley Capital Inves

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oakley Capital Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Oakley Capital is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 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.

Pair Trading with Oakley Capital and Reliance Industries

The main advantage of trading using opposite Oakley Capital and Reliance Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oakley Capital 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 Oakley Capital Investments 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.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.