Correlation Between GlobalData PLC and Reliance Industries

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

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

Diversification Opportunities for GlobalData PLC and Reliance Industries

0.22

Correlation Coefficient

GlobalData PLC  Reliance Industries

Modest diversification

The 3 months correlation between GlobalData and Reliance is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding GlobalData PLC and Reliance Industries Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Industries and GlobalData PLC 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 GlobalData PLC are associated (or correlated) with Reliance Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Industries has no effect on the direction of GlobalData PLC i.e., GlobalData PLC and Reliance Industries go up and down completely randomly.

Pair Corralation between GlobalData PLC and Reliance Industries

Assuming the 90 days trading horizon GlobalData PLC is expected to generate 1.49 times more return on investment than Reliance Industries. However, GlobalData PLC is 1.49 times more volatile than Reliance Industries Ltd. It trades about -0.08 of its potential returns per unit of risk. Reliance Industries Ltd is currently generating about -0.26 per unit of risk. If you would invest  20,800  in GlobalData PLC on September 22, 2024 and sell it today you would lose (2,300) from holding GlobalData PLC or give up 11.06% of portfolio value over 90 days.

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

GlobalData PLC  vs.  Reliance Industries Ltd

GlobalData PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GlobalData PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

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.

Pair Trading with GlobalData PLC and Reliance Industries

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

The idea behind GlobalData PLC and Reliance Industries Ltd 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.