Correlation Between Reliance Industries and MAS Financial

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

Diversification Opportunities for Reliance Industries and MAS Financial

0.36

Correlation Coefficient

Reliance Industries  MAS Financial

Weak diversification

The 3 months correlation between Reliance and MAS is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Industries Limited and MAS Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAS 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 MAS Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAS Financial Services has no effect on the direction of Reliance Industries i.e., Reliance Industries and MAS Financial go up and down completely randomly.

Pair Corralation between Reliance Industries and MAS Financial

Assuming the 90 days trading horizon Reliance Industries Limited is expected to under-perform the MAS Financial. But the stock apears to be less risky and, when comparing its historical volatility, Reliance Industries Limited is 1.33 times less risky than MAS Financial. The stock trades about -0.17 of its potential returns per unit of risk. The MAS Financial Services is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  28,655  in MAS Financial Services on September 15, 2024 and sell it today you would lose (2,090) from holding MAS Financial Services or give up 7.29% of portfolio value over 90 days.

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

Reliance Industries Limited  vs.  MAS Financial Services

Reliance Industries

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

MAS Financial Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MAS Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Reliance Industries and MAS Financial

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

The idea behind Reliance Industries Limited and MAS 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.