Correlation Between Reliance Industries and Gfinity PLC

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

Diversification Opportunities for Reliance Industries and Gfinity PLC

-0.04

Correlation Coefficient

Reliance Industries  Gfinity PLC

Good diversification

The 3 months correlation between Reliance and Gfinity is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Industries Ltd and Gfinity PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gfinity PLC 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 Gfinity PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gfinity PLC has no effect on the direction of Reliance Industries i.e., Reliance Industries and Gfinity PLC go up and down completely randomly.

Pair Corralation between Reliance Industries and Gfinity PLC

Assuming the 90 days trading horizon Reliance Industries is expected to generate 2.13 times less return on investment than Gfinity PLC. But when comparing it to its historical volatility, Reliance Industries Ltd is 6.82 times less risky than Gfinity PLC. It trades about 0.02 of its potential returns per unit of risk. Gfinity PLC is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  40.00  in Gfinity PLC on October 21, 2024 and sell it today you would lose (32.50) from holding Gfinity PLC or give up 81.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.8%
Values	Daily Returns

Reliance Industries Ltd  vs.  Gfinity PLC

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 latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Gfinity PLC

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gfinity PLC are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Gfinity PLC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Reliance Industries and Gfinity PLC

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

The idea behind Reliance Industries Ltd and Gfinity PLC 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.