Correlation Between Reliance Industrial and Mold Tek

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

By analyzing existing cross correlation between Reliance Industrial Infrastructure and Mold Tek Packaging Limited, you can compare the effects of market volatilities on Reliance Industrial and Mold Tek 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 Industrial with a short position of Mold Tek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Industrial and Mold Tek.

Diversification Opportunities for Reliance Industrial and Mold Tek

0.74

Correlation Coefficient

Reliance Industrial  Mold Tek

Poor diversification

The 3 months correlation between Reliance and Mold is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Industrial Infrastruc and Mold Tek Packaging Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mold Tek Packaging and Reliance Industrial 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 Industrial Infrastructure are associated (or correlated) with Mold Tek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mold Tek Packaging has no effect on the direction of Reliance Industrial i.e., Reliance Industrial and Mold Tek go up and down completely randomly.

Pair Corralation between Reliance Industrial and Mold Tek

Assuming the 90 days trading horizon Reliance Industrial Infrastructure is expected to under-perform the Mold Tek. In addition to that, Reliance Industrial is 1.34 times more volatile than Mold Tek Packaging Limited. It trades about -0.37 of its total potential returns per unit of risk. Mold Tek Packaging Limited is currently generating about -0.39 per unit of volatility. If you would invest  66,240  in Mold Tek Packaging Limited on December 2, 2024 and sell it today you would lose (18,770) from holding Mold Tek Packaging Limited or give up 28.34% of portfolio value over 90 days.

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

Reliance Industrial Infrastruc  vs.  Mold Tek Packaging Limited

Reliance Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Reliance Industrial Infrastructure 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 comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Mold Tek Packaging

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mold Tek Packaging Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Reliance Industrial and Mold Tek

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

The idea behind Reliance Industrial Infrastructure and Mold Tek Packaging Limited 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.