Correlation Between Reliance Global and GSR II

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

By analyzing existing cross correlation between Reliance Global Group and GSR II Meteora, you can compare the effects of market volatilities on Reliance Global and GSR II 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 Global with a short position of GSR II. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Global and GSR II.

Diversification Opportunities for Reliance Global and GSR II

0.16

Correlation Coefficient

Reliance Global  GSR II

Average diversification

The 3 months correlation between Reliance and GSR is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Global Group and GSR II Meteora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSR II Meteora and Reliance Global 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 Global Group are associated (or correlated) with GSR II. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSR II Meteora has no effect on the direction of Reliance Global i.e., Reliance Global and GSR II go up and down completely randomly.

Pair Corralation between Reliance Global and GSR II

If you would invest  4.93  in Reliance Global Group on September 15, 2024 and sell it today you would lose (0.36) from holding Reliance Global Group or give up 7.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	16.67%
Values	Daily Returns

Reliance Global Group  vs.  GSR II Meteora

Reliance Global Group

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Reliance Global Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal forward indicators, Reliance Global showed solid returns over the last few months and may actually be approaching a breakup point.

GSR II Meteora

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GSR II Meteora has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, GSR II is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Reliance Global and GSR II

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

The idea behind Reliance Global Group and GSR II Meteora 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.