Correlation Between Reliance Industries and Gaztransport

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

Diversification Opportunities for Reliance Industries and Gaztransport

-0.81

Correlation Coefficient

Reliance Industries  Gaztransport

Pay attention - limited upside

The 3 months correlation between Reliance and Gaztransport is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Industries Ltd and Gaztransport et Technigaz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport et Technigaz 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 Gaztransport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaztransport et Technigaz has no effect on the direction of Reliance Industries i.e., Reliance Industries and Gaztransport go up and down completely randomly.

Pair Corralation between Reliance Industries and Gaztransport

Assuming the 90 days trading horizon Reliance Industries Ltd is expected to under-perform the Gaztransport. In addition to that, Reliance Industries is 1.01 times more volatile than Gaztransport et Technigaz. It trades about -0.19 of its total potential returns per unit of risk. Gaztransport et Technigaz is currently generating about 0.08 per unit of volatility. If you would invest  12,575  in Gaztransport et Technigaz on September 13, 2024 and sell it today you would earn a total of  725.00  from holding Gaztransport et Technigaz or generate 5.77% return on investment over 90 days.

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

Reliance Industries Ltd  vs.  Gaztransport et Technigaz

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.

Gaztransport et Technigaz

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport et Technigaz are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Gaztransport is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Reliance Industries and Gaztransport

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

The idea behind Reliance Industries Ltd and Gaztransport et Technigaz 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.