Correlation Between Reliance Capital and Max Healthcare

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

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

Diversification Opportunities for Reliance Capital and Max Healthcare

0.0

Correlation Coefficient

Reliance Capital  Max Healthcare

Pay attention - limited upside

The 3 months correlation between Reliance and Max is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Capital Limited and Max Healthcare Institute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Max Healthcare Institute and Reliance 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 Reliance Capital Limited are associated (or correlated) with Max Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Max Healthcare Institute has no effect on the direction of Reliance Capital i.e., Reliance Capital and Max Healthcare go up and down completely randomly.

Pair Corralation between Reliance Capital and Max Healthcare

Assuming the 90 days trading horizon Reliance Capital Limited is expected to under-perform the Max Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Reliance Capital Limited is 3.33 times less risky than Max Healthcare. The stock trades about -0.11 of its potential returns per unit of risk. The Max Healthcare Institute is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  73,618  in Max Healthcare Institute on October 8, 2024 and sell it today you would earn a total of  44,217  from holding Max Healthcare Institute or generate 60.06% return on investment over 90 days.

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

Reliance Capital Limited  vs.  Max Healthcare Institute

Reliance Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reliance Capital Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Reliance Capital is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Max Healthcare Institute

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Max Healthcare Institute are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady essential indicators, Max Healthcare disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Reliance Capital and Max Healthcare

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

The idea behind Reliance Capital Limited and Max Healthcare Institute 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.