Correlation Between Quess Corp and Reliance Power

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

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

Diversification Opportunities for Quess Corp and Reliance Power

0.43

Correlation Coefficient

Quess Corp  Reliance Power

Very weak diversification

The 3 months correlation between Quess and Reliance is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Quess Corp Limited and Reliance Power Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Power and Quess Corp 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 Quess Corp Limited are associated (or correlated) with Reliance Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Power has no effect on the direction of Quess Corp i.e., Quess Corp and Reliance Power go up and down completely randomly.

Pair Corralation between Quess Corp and Reliance Power

Assuming the 90 days trading horizon Quess Corp Limited is expected to generate 0.61 times more return on investment than Reliance Power. However, Quess Corp Limited is 1.65 times less risky than Reliance Power. It trades about -0.02 of its potential returns per unit of risk. Reliance Power Limited is currently generating about -0.04 per unit of risk. If you would invest  66,635  in Quess Corp Limited on October 22, 2024 and sell it today you would lose (910.00) from holding Quess Corp Limited or give up 1.37% of portfolio value over 90 days.

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

Quess Corp Limited  vs.  Reliance Power Limited

Quess Corp Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quess Corp Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Quess Corp is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Reliance Power

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Reliance Power Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Reliance Power sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Quess Corp and Reliance Power

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

The idea behind Quess Corp Limited and Reliance Power Limited 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 Transaction History module to view history of all your transactions and understand their impact on performance.