Correlation Between Reliance Industries and UNIQA Insurance

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

Diversification Opportunities for Reliance Industries and UNIQA Insurance

0.77

Correlation Coefficient

Reliance Industries  UNIQA Insurance

Poor diversification

The 3 months correlation between Reliance and UNIQA is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Industries Ltd and UNIQA Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIQA Insurance Group 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 UNIQA Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIQA Insurance Group has no effect on the direction of Reliance Industries i.e., Reliance Industries and UNIQA Insurance go up and down completely randomly.

Pair Corralation between Reliance Industries and UNIQA Insurance

Assuming the 90 days trading horizon Reliance Industries Ltd is expected to under-perform the UNIQA Insurance. In addition to that, Reliance Industries is 1.46 times more volatile than UNIQA Insurance Group. It trades about -0.19 of its total potential returns per unit of risk. UNIQA Insurance Group is currently generating about -0.04 per unit of volatility. If you would invest  759.00  in UNIQA Insurance Group on September 13, 2024 and sell it today you would lose (18.00) from holding UNIQA Insurance Group or give up 2.37% of portfolio value over 90 days.

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

Reliance Industries Ltd  vs.  UNIQA Insurance Group

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.

UNIQA Insurance Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNIQA Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, UNIQA Insurance is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Reliance Industries and UNIQA Insurance

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

The idea behind Reliance Industries Ltd and UNIQA Insurance Group 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.