Correlation Between Reliance Industries and Sligro Food

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

Diversification Opportunities for Reliance Industries and Sligro Food

0.84

Correlation Coefficient

Reliance Industries  Sligro Food

Very poor diversification

The 3 months correlation between Reliance and Sligro is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Industries Ltd and Sligro Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sligro Food 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 Sligro Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sligro Food Group has no effect on the direction of Reliance Industries i.e., Reliance Industries and Sligro Food go up and down completely randomly.

Pair Corralation between Reliance Industries and Sligro Food

Assuming the 90 days trading horizon Reliance Industries Ltd is expected to under-perform the Sligro Food. In addition to that, Reliance Industries is 1.01 times more volatile than Sligro Food Group. It trades about -0.29 of its total potential returns per unit of risk. Sligro Food Group is currently generating about 0.05 per unit of volatility. If you would invest  1,072  in Sligro Food Group on September 25, 2024 and sell it today you would earn a total of  9.00  from holding Sligro Food Group or generate 0.84% return on investment over 90 days.

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

Reliance Industries Ltd  vs.  Sligro Food 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.

Sligro Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sligro Food Group 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.

Pair Trading with Reliance Industries and Sligro Food

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

The idea behind Reliance Industries Ltd and Sligro Food 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.