Correlation Between Reliance Industries and Kroger

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

By analyzing existing cross correlation between Reliance Industries Ltd and Kroger Co, you can compare the effects of market volatilities on Reliance Industries and Kroger 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 Kroger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Industries and Kroger.

Diversification Opportunities for Reliance Industries and Kroger

-0.73

Correlation Coefficient

Reliance Industries  Kroger

Pay attention - limited upside

The 3 months correlation between Reliance and Kroger is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Industries Ltd and Kroger Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kroger 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 Ltd are associated (or correlated) with Kroger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kroger has no effect on the direction of Reliance Industries i.e., Reliance Industries and Kroger go up and down completely randomly.

Pair Corralation between Reliance Industries and Kroger

Assuming the 90 days trading horizon Reliance Industries Ltd is expected to under-perform the Kroger. In addition to that, Reliance Industries is 1.04 times more volatile than Kroger Co. It trades about -0.2 of its total potential returns per unit of risk. Kroger Co is currently generating about 0.15 per unit of volatility. If you would invest  5,597  in Kroger Co on September 14, 2024 and sell it today you would earn a total of  703.00  from holding Kroger Co or generate 12.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Reliance Industries Ltd  vs.  Kroger Co

Reliance Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reliance Industries Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Kroger

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kroger Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Kroger may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Reliance Industries and Kroger

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

The idea behind Reliance Industries Ltd and Kroger Co 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.