Correlation Between Reliance Industries and Hexa Tradex

Can any of the company-specific risk be diversified away by investing in both Reliance Industries and Hexa Tradex 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 Hexa Tradex 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 Hexa Tradex Limited, you can compare the effects of market volatilities on Reliance Industries and Hexa Tradex 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 Hexa Tradex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Industries and Hexa Tradex.

Diversification Opportunities for Reliance Industries and Hexa Tradex

0.39

Correlation Coefficient

Reliance Industries  Hexa Tradex

Weak diversification

The 3 months correlation between Reliance and Hexa is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Industries Limited and Hexa Tradex Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexa Tradex Limited 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 Hexa Tradex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexa Tradex Limited has no effect on the direction of Reliance Industries i.e., Reliance Industries and Hexa Tradex go up and down completely randomly.

Pair Corralation between Reliance Industries and Hexa Tradex

Assuming the 90 days trading horizon Reliance Industries Limited is expected to under-perform the Hexa Tradex. But the stock apears to be less risky and, when comparing its historical volatility, Reliance Industries Limited is 4.59 times less risky than Hexa Tradex. The stock trades about -0.24 of its potential returns per unit of risk. The Hexa Tradex Limited is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  19,085  in Hexa Tradex Limited on December 2, 2024 and sell it today you would earn a total of  2,834  from holding Hexa Tradex Limited or generate 14.85% return on investment over 90 days.

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

Reliance Industries Limited  vs.  Hexa Tradex Limited

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 inconsistent 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.

Hexa Tradex Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hexa Tradex Limited 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 fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Reliance Industries and Hexa Tradex

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

The idea behind Reliance Industries Limited and Hexa Tradex 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..