Correlation Between Reliance Industries and Geojit Financial

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

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

Diversification Opportunities for Reliance Industries and Geojit Financial

0.56

Correlation Coefficient

Reliance Industries  Geojit Financial

Very weak diversification

The 3 months correlation between Reliance and Geojit is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Industries Limited and Geojit Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geojit Financial Services and Reliance Industries 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 Industries Limited are associated (or correlated) with Geojit Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geojit Financial Services has no effect on the direction of Reliance Industries i.e., Reliance Industries and Geojit Financial go up and down completely randomly.

Pair Corralation between Reliance Industries and Geojit Financial

Assuming the 90 days trading horizon Reliance Industries Limited is expected to under-perform the Geojit Financial. But the stock apears to be less risky and, when comparing its historical volatility, Reliance Industries Limited is 2.89 times less risky than Geojit Financial. The stock trades about -0.06 of its potential returns per unit of risk. The Geojit Financial Services is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  6,712  in Geojit Financial Services on December 4, 2024 and sell it today you would earn a total of  423.00  from holding Geojit Financial Services or generate 6.3% return on investment over 90 days.

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

Reliance Industries Limited  vs.  Geojit Financial Services

Reliance Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Reliance Industries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Geojit Financial Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Geojit Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Reliance Industries and Geojit Financial

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

The idea behind Reliance Industries Limited and Geojit Financial Services 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.