Correlation Between Reliance Industries and SANTANDER

Can any of the company-specific risk be diversified away by investing in both Reliance Industries and SANTANDER 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 SANTANDER 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 SANTANDER UK 10, you can compare the effects of market volatilities on Reliance Industries and SANTANDER 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 SANTANDER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Industries and SANTANDER.

Diversification Opportunities for Reliance Industries and SANTANDER

-0.6

Correlation Coefficient

Reliance Industries  SANTANDER

Excellent diversification

The 3 months correlation between Reliance and SANTANDER is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Industries Ltd and SANTANDER UK 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANTANDER UK 10 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 SANTANDER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANTANDER UK 10 has no effect on the direction of Reliance Industries i.e., Reliance Industries and SANTANDER go up and down completely randomly.

Pair Corralation between Reliance Industries and SANTANDER

Assuming the 90 days trading horizon Reliance Industries Ltd is expected to under-perform the SANTANDER. In addition to that, Reliance Industries is 13.12 times more volatile than SANTANDER UK 10. It trades about -0.12 of its total potential returns per unit of risk. SANTANDER UK 10 is currently generating about -0.03 per unit of volatility. If you would invest  15,650  in SANTANDER UK 10 on September 1, 2024 and sell it today you would lose (10.00) from holding SANTANDER UK 10 or give up 0.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Reliance Industries Ltd  vs.  SANTANDER UK 10

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 December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

SANTANDER UK 10

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SANTANDER UK 10 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, SANTANDER is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Reliance Industries and SANTANDER

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

The idea behind Reliance Industries Ltd and SANTANDER UK 10 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.